Oil Falls 9% as Trump Announces Iran-Israel Ceasefire

Oil prices dropped nearly 9% overnight and another 3% on Tuesday after President Trump claimed Israel and Iran had agreed to a “forever” ceasefire, easing fears over Strait of Hormuz disruptions. US stock futures rose, with the S&P 500 and Nasdaq up 0.5% and 0.7% respectively, while Europe’s EUROSTOXX 50 futures jumped 1.2%. Despite the ceasefire claim, missile strikes continued, and investor focus now turns to Fed Chair Powell’s congressional testimony amid mixed signals on July rate cuts.

Equities

The FTSE 100 fell 0.2% on Monday, closing at its lowest level since 30 May, as a stronger pound weighed on internationally exposed stocks. The move came despite gains in oil majors, with Shell and BP edging higher following a dip in crude prices from last week’s five-month highs.

Shares in Harbour Energy rose 1%. Airline stocks fell as fuel prices remained elevated: EasyJet dropped 1.1%, Wizz Air lost 1.7%, and British Airways owner IAG declined 2.4%.

Spectris surged 15.7% after agreeing to a £4.4 billion takeover offer from Advent International, rejecting a rival bid from KKR. Primary Health Properties slid 4.2% after Assura agreed to acquire it in a £1.78 billion all-share deal.

Sterling rose 0.4%, lifted by broad dollar weakness and dovish signals from a US Federal Reserve official, which in turn weighed on global-facing firms like HSBC and British American Tobacco.

In the US, futures pointed to a stronger open on Tuesday, with the Dow Jones Industrial Average set to rise 291 points, or 0.68%. S&P 500 futures gained 0.79% and Nasdaq 100 futures climbed 1.06%, boosted by President Trump’s announcement of a ceasefire between Israel and Iran.

The Dow rose nearly 375 points, the S&P 500 gained 0.96%, and the Nasdaq Composite added 0.94%. The gains came even as investors absorbed news of Iran’s retaliatory missile strike on a US base in Qatar, which was intercepted by Qatari defences.

Forex & Commodities

The US dollar slipped on Tuesday, pressured by a broad risk rally following President Trump’s announcement of a ceasefire agreement between Israel and Iran. The ceasefire, described by Trump as “complete and total,” reduced safe-haven demand, sending the dollar 0.47% lower against the yen to 145.45. The euro rose 0.23% to $1.1605, while sterling gained 0.27% to trade at $1.3564. Both the Australian and New Zealand dollars advanced by more than 0.5%, buoyed by improved risk sentiment. Israel’s shekel also gained 1% against the dollar, reaching its strongest level since early 2023.

Gold fell sharply as investors pulled back from safe-haven assets, with spot prices down 0.9% to $3,338.39 per ounce, the lowest since 11 June. US gold futures declined 1.2% to $3,352.60. The easing of geopolitical risk, combined with a dovish shift from some US Federal Reserve policymakers, weighed further on bullion. Fed Governor Michelle Bowman stated the central bank should consider rate cuts soon, while Christopher Waller indicated he would support a cut as early as July.

Oil prices plunged, giving up more than 5%, as fears of Middle East supply disruptions eased. Brent crude dropped $3.82 to $67.66 a barrel, and US West Texas Intermediate fell $3.75 to $64.76. The retreat extended Monday’s 7% decline, as Israel confirmed agreement to Trump’s ceasefire proposal. Markets anticipate more stable crude supply if the deal holds, particularly through the Strait of Hormuz.