Morning Note: A Round-up of Global Financial Market News.

Market News

The US and Iran said they have reached an interim accord to halt the war and reopen the Strait of Hormuz, paving the way for talks on Tehran’s nuclear programme. Officials from both sides will meet in Switzerland on Friday to sign an agreement. No text has been released by either country. Shipowners remain wary of how the deal will pan out after months of false starts, with nearly 600 vessels primed for exit from the Persian Gulf.

Brent Crude fell back by 4% to $83 a barrel, a three month low, as concerns over energy-supply disruptions eased. The dollar declined against major peers, while gold jumped above $4,300 an ounce. Swaps traders were pricing in about a 60% chance of a quarter-point Federal Reserve interest-rate hike by December, down from about 80% on Friday. The yield on the US 10-year Treasury slipped to 4.44%.

Equity markets have been buoyed by the news. In Asia this morning, Japan’s Nikkei 225 rose 5% to a new high, while the Hang Seng (+0.6%) and Shanghai Composite (+1.6%) were also firm. In the US, the S&P 500 is currently expected to open up 1.4% this afternoon. SpaceX enjoyed a strong trading debut, rising 19% after a record-breaking IPO.

The FTSE 100 is currently 0.6% higher at 10,530. Bunzl is up 3% after a report said activist investor Elliott has taken an almost 5% stake. Rolls-Royce is up 5% as Sir Keir Starmer and Sanae Takaichi are set to sign an agreement to develop advanced modular nuclear reactors.

The Bank of England Monetary Policy Committee meets this week. Economists expect the rare unity seen in recent hold decisions (at 3.75%) to break down, with more members likely to back hikes amid mounting inflation pressures. Clearly, a resolution to the conflict in the Middle East would be helpful. The yield on the 10-year Gilt has slipped this morning to 4.77%, while Sterling trades at $1.3430 and €1.1570.

Source: Bloomberg