LONDON/SYDNEY (Reuters) — Global stocks gained and oil tumbled on Friday as fresh hopes of a peace deal between Iran and the U.S. fanned a rally, while investors awaited the hotly anticipated market debut of Elon Musk’s SpaceX once Wall Street opens.
European stocks gained more than 1.5% following strong gains in Asia, while Wall Street futures pointed to gains of between 0.4% and 0.5%.
Oil futures were down more than 3% after President Donald Trump said a peace deal could be signed as soon as this weekend, even as Tehran said it had not made a final decision on a pact.
A memorandum between the United States and Iran to halt the war could be signed as soon as Sunday, a Western source told Reuters on Friday.
Trump has repeatedly said a deal with Iran to end the war was close since mid-March. This time, the indication that diplomacy was continuing productively was enough for the market to latch on to, Michael Nizard, head of multi-asset at Edmond de Rothschild Asset Management, said.
“The market remains very sensitive to the peace deal and the numerous and various declarations from Trump,” Nizard added. “Today, I think the (potential for) peace is well under-priced.”
The huge SpaceX IPO also has the potential to set the tone for global markets, given its significant allocation to everyday investors that can make more short-term decisions, Nizard said.
“This is a very important market event… the retail market is very important for gaining momentum.”
The SpaceX IPO raised a record $75 billion, valuing the rocket and spacecraft manufacturer at $1.77 trillion and making Musk the world’s first trillionaire.
Inflation fears
The Middle East peace deal, if confirmed, would be the most significant diplomatic breakthrough yet to end the three-month-old war, which sent global energy prices sharply higher. The European Central Bank had to raise interest rates for the first time in nearly three years on Thursday to nip war-driven inflation in the bud.
Final inflation data from several European countries including France and Spain showed inflation accelerated in May, while official data showed Britain’s economy contracted by 0.1% in April — its first monthly drop since August.
Oil prices slumped on expectations of an impending agreement. Brent crude futures dropped 3.4% at $87.35 per barrel.
Treasuries held onto gains as hopes of a peace deal in the Gulf led markets to trim bets of a rate hike from the Federal Reserve this year.
Two-year Treasury yields were last at 4.062% on Friday, while benchmark 10-year Treasury yields were at 4.839%.
The dollar was broadly flat after overnight losses. It rose 0.1% to 160.15 yen, after retreating 0.4% in the prior session. Traders are still on high alert for intervention from Japanese authorities as the yen stays close to the 160 level that many see as a line in the sand.
Precious metals retreated on Friday. Spot gold slipped 0.2% to $4,206 an ounce, following a 3.5% jump overnight.
