US-Iran Talks Anticipated to Heat Up, Oil Prices Plunge by 7%, Global Stocks Reach New High

The core logic driving the market is singular—expectations of US-Iran peace talks. Trump indicated on social media on Monday that negotiations were "going well," with a high-level Iranian delegation present in Doha, where it's reported that both sides have reached an understanding to freeze assets, potentially announcing an agreement as early as Tuesday. SEB strategist Dana Malas characterized the market's reaction as a clear FOMO sentiment: "Investors are unwilling to lag behind amidst the end of the Iran war and the continuous push of AI themes in the stock market."

Oil prices are hit the first. WTI crude plummeted over 6%, reporting at $90.30 per barrel; Brent crude closed down by 7.14%, at $96.14 per barrel. Bloomberg strategist Garfield Reynolds pointed out that US crude oil reserves are decreasing at an unprecedented rate, and whether the US and Iran can reach an agreement this weekend is crucial to the global market. Expectations for the reopening of Hormuz have already been priced into oil prices.

In terms of the stock market, the US spot market was closed for Memorial Day, but S&P 500 futures rose by 0.95%, Nasdaq 100 futures climbed by 1.35%, and Russell 2000 futures increased by 1.57%. European markets performed even more robustly, the Stoxx Europe 600 index closed up 1.04%, marking a six-day winning streak and reaching its highest level since the outbreak of the US-Iran war; the Euro Stoxx 50 index closed up 1.95%; the German DAX closed up 2.01%, and the Italian FTSE MIB index made a historical closing high at 50,220 points. The MSCI World Index also hit a record high in sync with closing times.

At the individual stock level, Delivery Hero surged nearly 12% in a single day, as reports suggest that Uber is considering acquiring the company outright to compete head-on with DoorDash. Among blue-chip stocks in the Eurozone, Safran rose by 5.79%, Infineon jumped by 4.51%, and both Bankia and Banco Santander increased by over 4%.

Precious and industrial metals strengthened across the board. Spot gold rose by 1.35%, reporting at $4,570 per ounce; spot silver climbed by 3.35%, reporting at $78.07; COMEX copper futures increased by 1.40%. The US dollar index fell by 0.26%, reaching 98.977 points. Commonwealth Bank of Australia strategist Samara Hammoud believes that once the agreement materializes, the dollar will weaken further in the short term, but then will strengthen again due to strong fundamentals.

The Eurozone debt market also strengthened concurrently, with the German 10-year bond yield falling by 9.1 basis points to 2.946%, and the two-year German debt yield falling by 10.8 basis points. The 10-year bond yields of France, Italy, Spain, and Greece fell by over 11 basis points at most. In terms of cryptocurrencies, Bitcoin increased by more than 1%, reporting at $77,500.

Note that the market has priced in the agreement materializing, but there are still uncertainties inherent in the negotiations themselves. The Iranian Foreign Ministry spokesperson made it clear on Monday that it is "still far away" from signing an agreement, and the final outcome is still subject to the approval of Iran's supreme leader. Should negotiations encounter setbacks, the current optimistic pricing will face the risk of a rapid reversal.