US stock index futures surge on Trump ceasefire

European stock indices were firmer across the board, following the shift in sentiment from Wall Street and Asia. The German DAX led the gainers, rallying 2% in early trade, with the Euro Stoxx 50 close behind. 

In contrast, the UK’s FTSE 100 could only manage modest gains. The index was held back by losses for the oil majors, which fell sharply along with the price of crude oil. Despite this, the ceasefire has removed a significant cloud hanging over sentiment.

Source: TN Trader

Early movers include Swedish carmaker Volvo, which rose 2.3% in early trade before pulling back. The DAX got additional support from a better-than-expected German IFO print, which showed growing business confidence.

Asian Pacific stock indices posted broad-based gains overnight, mirroring the improved sentiment across US markets. Investors welcomed the news of the ceasefire between Iran and Israel, with Hong Kong and mainland China leading the advance.

Risk appetite was clearly back in play, as geopolitical tensions eased along with fears of escalation.

The US dollar, which had firmed yesterday morning on safe-haven flows, saw those gains fade into Monday’s close with further selling overnight. Two members of the Fed’s FOMC separately indicated that they would consider voting for a 25 basis point rate cut at the July meeting. 

Investors are also looking ahead to the next tariff deadline early next month and seem unwilling to add US dollar exposure until they have some clarity on trade. The Japanese yen emerged as the outperformer overnight as traders unwound defensive positions.

Source: TN Trader

Aside from any geopolitical updates, today’s key event will be Fed Chair Jerome Powell’s testimony in Washington.

Gold fell sharply this morning, dropping over 1.5% to hit its lowest level in a fortnight. Gold gave back recent gains as the ceasefire deflated demand for safe-haven assets and was back within sight of $3,300 per ounce. 

This is not a particularly significant level of support. But should it break below here, then there’s little to stop it from heading down to a far more significant support level around $3,200.

Source: TN Trader

Silver dropped towards $35.50 overnight but recovered lost ground quite quickly. In contrast to gold, buyers emerged to support the silver price, and it continues to consolidate above $36 per ounce.

Source: TN Trader

Crude oil was the standout mover overnight, with prices falling another 3.5% following Monday’s 7% plunge. 

Brent and WTI crude both dropped sharply yesterday as Iran’s retaliatory attacks were far weaker than feared, and as the likelihood of Iran blocking the Strait of Hormuz faded. Then this morning’s ceasefire further reduced the perceived threat to Middle Eastern oil supply routes.

Having approached $78 per barrel on Sunday night, front-month WTI pulled back towards $64 in the first hour of trade this morning. 

Source: TN Trader

Natural gas futures fell overnight, extending losses as the broader energy complex adjusted to reduced geopolitical risk. With the ceasefire calming market nerves and weather outlooks shifting, traders appear to have lost some of their bullish appetite. 

Volatility remains elevated, but the upside momentum seen earlier in the month has cooled noticeably.

Cryptocurrencies bounced back strongly overnight, supported by renewed investor confidence and a shift into higher-risk assets. Bitcoin pushed back above $105,000, having started the week below $100,000. 

Ether was up over 3% in mid-morning trade in Europe. This took it back above key support around $2,400, but it has yet to regain the $2,500 level. 

The VIX dropped 6% overnight in a move which took the July futures back below 20.00.  The decline in volatility reflects a calming across markets as geopolitical uncertainty eases and equities recover. 

Still, the index remains relatively elevated when compared to the baseline measure from the beginning of this year. There is still plenty of risk out there, as tariffs are coming back into focus even as some geopolitical tensions have eased.

Beyond the ceasefire news, today’s focus turns to a fresh round of data and official commentary. US consumer confidence will be published this afternoon, while Federal Reserve Chair Jerome Powell will testify in Washington today and tomorrow before the House Financial Services Committee and the Senate Banking Committee, respectively.

In corporate headlines, Carnival earnings are on tap, while regulatory pressure mounts on Tesla after multiple robotaxi incidents were reportedly caught on camera. On the global stage, NATO is pushing for increased defence spending - a move some member states are already calling financially unsustainable.

The ceasefire deal has clearly changed the narrative. For now, markets are treating it as a green light to add risk. Oil and gold are falling sharply, the dollar is weakening, and equities are flying. However, it’s unclear if this calm will last. Investors will be watching closely for the next catalyst.