Global markets were broadly cautious on Tuesday as investors assessed the implications of a preliminary peace agreement between the United States and Iran, monitored a surprise policy move from the Bank of Japan and continued to track the extraordinary post-IPO surge in SpaceX (NASDAQ:SPCX).
Futures Trade in Narrow Range Ahead of Fed Meeting
U.S. stock futures were little changed in early trading as investors awaited further details surrounding the framework agreement between Washington and Tehran.
At 07:10 GMT, Dow Jones futures were up 65 points, or 0.1%, while S&P 500 futures were largely flat. Nasdaq 100 futures slipped 0.1%.
Wall Street closed sharply higher on Monday after news of the agreement helped ease concerns over the conflict in the Middle East. The Dow Jones Industrial Average gained 0.9%, the S&P 500 advanced 1.7% and the Nasdaq Composite surged 3.1%.
“The driver of the equity advance was the Iran deal, not so much because people feel the agreement will be a powerful source of incremental upside itself but instead that by removing it as a potential risk factor, stocks will be able to focus on what are encouraging earnings fundamentals,” analysts at Vital Knowledge said in a note.
Investor attention is now turning to the Federal Reserve, which begins its latest policy meeting on Tuesday. Markets widely expect interest rates to remain unchanged, with traders focused on comments from Fed Chair Kevin Warsh following Wednesday’s decision.
Trump Expects Hormuz Reopening by Friday
President Donald Trump said the Strait of Hormuz should be fully reopened by Friday, coinciding with a planned signing ceremony in Switzerland involving U.S. and Iranian representatives.
Speaking at the G7 summit in France, Trump said the strategic waterway was already “partially opened.”
“Ships are starting to go out now, and on Friday it will be completely opened,” he said.
However, questions remain over the timetable. According to reports, some U.S. officials believe it could take up to two weeks before shipping operations return to normal.
Trump also indicated that the full text of the agreement would be released on Friday, although other officials suggested publication could occur sooner. Reports indicate the framework includes reopening the Strait of Hormuz, extending the current ceasefire by 60 days and lifting the U.S. blockade of Iranian ports.
Vice President JD Vance, who is expected to attend the signing ceremony, told CNBC that “there are a lot of very important details to figure out.”
Oil Prices Continue to Retreat
Oil markets remained under pressure as traders assessed the prospect of improved energy flows through the Strait of Hormuz.
Brent crude futures fell 1.3% to $82.12 per barrel. The benchmark had previously climbed above $110 following the outbreak of hostilities in February amid fears of a prolonged disruption to global energy supplies.
Before the conflict, around 20% of the world’s oil and liquefied natural gas shipments passed through the narrow shipping route.
Analysts caution that even if the agreement holds, a full restoration of energy exports may take time, potentially keeping oil prices above pre-conflict levels.
Bank of Japan Raises Rates to Highest Level in Decades
Reflecting ongoing inflation concerns, the Bank of Japan increased interest rates by 25 basis points on Tuesday.
The move lifted the benchmark overnight rate to 1.0%, the highest level in more than 30 years. The decision was approved by a 7-1 vote.
“The price pass-through stemming from the rise in crude oil prices has been progressing at a relatively fast pace in business-to-business transactions, which could spread to an increase in consumer prices,” the BOJ said in a statement.
The central bank warned that inflation could remain above its 2% target and also announced plans to slow the pace of its bond purchases over the coming quarters.
SpaceX Extends Historic Post-IPO Rally
SpaceX (NASDAQ:SPCX) continued its remarkable advance after gaining more than 19% during its second trading session.
The aerospace company, which completed the largest initial public offering in history last week, ended its debut session with a market value of approximately $2.1 trillion.
Shares rose another 19.6% on Monday and added a further 11.2% in after-hours trading, changing hands at around $213.99.
The rally has pushed SpaceX’s valuation close to $3 trillion, placing it among the world’s most valuable listed companies alongside technology giants such as Alphabet, Apple and Nvidia.