Volkswacht Bodensee - Oil slides, stocks rise as Iran-Israel ceasefire holds

Crude futures slumped in volatile trading after Trump announced a ceasefire.

"This morning's ceasefire further reduced the perceived threat to Middle Eastern oil supply routes," said David Morrison, analyst at Trade Nation.

The main international and US oil contracts briefly bounced off their lows as Israel and Iran accused each other of breaking the ceasefire, but then fell around five percent after Trump berated the two countries in an expletive-laced outburst.

Iran's President Masoud Pezeshkian said later his country will respect a ceasefire if Israel also upholds its side of the terms, while Israel said it refrained from further strikes after a phone call between Trump and Prime Minister Benjamin Netanyahu.

Prices were also brought down by Trump saying that China could continue to buy oil from Iran, in what appeared to be relief from sanctions Washington had previously imposed.

Oil prices had already fallen by more than seven percent on Monday after Iran's response to US strikes on its nuclear facilities was limited to choreographed missile launches on a US military base in Qatar.

There was also relief that Iran has refrained from closing the strategic Strait of Hormuz, a chokepoint for about one-fifth of the world's oil supply.

Wall Street's three main indices were up around one percent in late morning trading.

Paris and Frankfurt ended the day with solid gains, but London closed flat as shares in oil majors Shell and BP fell along with crude prices.

Asian markets closed higher.

The dollar accelerated losses on Tuesday after remarks by US Federal Reserve chair Jerome Powell failed to dampen market expectations for interest rate cuts.

The European single currency reached its highest level against the dollar since October 2021 at $1.1642, while the greenback also dropped to its lowest level against the British pound since January 2022.

"Powell was a little more neutral to slightly more dovish than markets had anticipated, no doubt helped by the collapse in oil prices," said Fawad Razaqzada, analyst at City Index and Forex.com.

"The US dollar could be heading further lower unless a fresh flare up in the Middle East conflict sends oil prices spiking again," he added.

Escalating tensions in the Middle East has removed some focus from Trump's tariffs war, which threatens to dampen global economic growth.

"With the immediate geopolitical tensions dialled down, investors are free to focus on President Trump's trade war and the first tariff deadline coming up in a couple of weeks," Morrison said.

"As far as investors are concerned, they've just stared down the prospect of World War Three, so they're not going to be fussed by a few percentage points on US imports," he added.

Several countries face steep tariffs if they fail to reach deals with the United States by July 9, with duties of 50 percent looming large over the European Union.

- Key figures at around 1530 GMT -

Brent North Sea Crude: DOWN 4.9 percent at $67.04 per barrel

West Texas Intermediate: DOWN 4.8 percent at $65.22 per barrel

New York - Dow: UP 1.0 percent at 42,987.03 points

New York - S&P 500: UP 0.9 percent at 6,080.79

New York - Nasdaq Composite: UP 1.3 percent at 19,890.87

London - FTSE 100: FLAT at 8,758.99

Paris - CAC 40: UP 1.0 percent at 7,615.99

Frankfurt - DAX: UP 1.6 percent at 23,641.58

Tokyo - Nikkei 225: UP 1.1 percent at 38,790.56 (close)

Hong Kong - Hang Seng Index: UP 2.1 percent at 24,177.07 (close)

Shanghai - Composite: UP 1.2 percent at 3,420.57 (close)

Euro/dollar: UP at $1.1628 from $1.1581 on Monday

Pound/dollar: UP at $1.3626 from $1.3526

Dollar/yen: DOWN at 144.77 yen from 146.12 yen

Euro/pound: DOWN at 85.34 pence from 85.60 pence

burs-rl/gv

O.Schlaepfer--VB