Wall Street and European markets have surged to record highs after the United States and Iran reached a preliminary peace deal, while oil prices tumbled to a three-month low on hopes that the Strait of Hormuz will soon reopen.
The Dow Jones industrial average rose 1% to a new peak of 51,857 points, with Boeing leading gains, while the Russell 2000 index of smaller companies also hit a record high, up 1.5%. European shares had earlier set their own record high, with investors cheered by President Trump's announcement that a deal was "now complete".
In a social media post, Trump said: "Ships of the World, start your engines. Let the oil flow!" Iran confirmed that the text of a memorandum of understanding had been finalised, and the two countries are expected to sign the agreement in Switzerland after the G7 leaders' conference. Brent crude dropped 5% to below $83 a barrel, and European wholesale gas prices fell 6%.
London's FTSE 100 missed out on the rally, closing 41 points lower at 10,430, down 0.4%. Defence firm BAE Systems fell 4.7% on hopes of an end to hostilities, while oil and gas producer Shell dropped 4.3%.
Analysts cautioned that a return to normality could be fragile. ABN Amro noted that Israel is not part of the deal, and many sticking points remain, including uranium enrichment, reconstruction costs, and Iran's desire to levy tolls on the Strait of Hormuz. The IMF's managing director, Kristalina Georgieva, said the global economy "appears to be holding up" more than three months after the conflict began.
