Iran promised to open the Strait of Hormuz within a month of the deal. What's in the markets?

Iranian state television presented details of an "unofficial draft of an interim peace agreement" between Tehran and Washington a few minutes before the opening of the main trading session on the U.S. stock exchanges, Bloomberg writes. Among other things, according to Iranian media, it says that Iran will establish a mechanism to control shipping in the Strait of Hormuz together with Oman, and traffic through this waterway will return to pre-war levels within a month after the deal is agreed, Bloomberg writes.

It is unknown how relevant the draft document reported by Iranian state television is and whether the U.S. has agreed to its terms, Bloomberg points out. Among other key points of this draft, the agency names the U.S. lifting of the naval blockade of Iranian ports and vessels, as well as the withdrawal of U.S. warships from Iran's territorial waters.

Against this background, oil prices intensified their ongoing decline on May 27: July contracts for Brent crude oil fell to a low of $94.16 per barrel - at the time of publication they are depreciating by 4% against the previous close and are trading at $95.55. Futures for US WTI with delivery next month are losing almost 5% - at $89.3.

Meanwhile, the main U.S. stock indices in the first minutes of trading showed a slight growth, but then went into a small minus: the broad index of American stocks S&P 500 loses symbolic 0.09%, technological Nasdaq Composite falls by 0.29%, the index of "blue chips" Dow Jones - the only one - grows by 0.3%. The Russell 2000 index of small and mid-capitalization companies loses 0.01%.

The VIX Volatility Index, also known as the "Wall Street Fear Index," falls 0.2% to 16.9 points - any value above 20 indicates heightened volatility in the markets.

Spot gold falls 1.65% to $4433.5 an ounce. Spot silver is down almost 3% at $74.6.

"The changing environment in the Middle East, as well as still-high government bond yields, could put stock market rallies around the world to the test. Spikes in market volatility remain likely as investors react to new headlines," UBS analysts warned (quoted by Reuters). But at the same time, they noted that "strong [corporate] earnings performance over the medium term should support further upside for equities": "We see attractive opportunities in various regions," UBS added.

Barclays strategists believe that the conclusion of a peace deal between the U.S. and Iran could trigger a broad rotation in equities, Bloomberg writes.

"Combine reports of a [possible] memorandum of understanding with market momentum and you get the stage for explosive [stock market] gains," said Brian Jacobsen, chief economic strategist at Annex Wealth Management. - But the pressure can build up for a long time," he warned, noting that investors should remain "optimistic" but not euphoric about market growth.

This article was AI-translated and verified by a human editor