(Sharecast News) - Wall Street futures were firmly in the green ahead of the opening bell on Monday as traders prepared for a holiday‑shortened week, buoyed by news that Washington and Tehran had reached an agreement to end the war, according to Donald Trump.
As of 1230 BST, Dow Jones futures were up 1.04%, while S&P 500 and Nasdaq-100 futures had the indices opening 1.36% and 2.2% firmer, recpectively.
The Dow closed 353.51 points higher on Friday after Donald Trump called off further strikes on Iran and said a peace deal between the two countries could be signed in the coming days.
Futures traded higher after Trump said late on Sunday that the deal was "now complete", while Pakistan's prime minister Shehbaz Sharif added that a formal signing ceremony was expected to take place on Friday in Switzerland.
Trump also authorised the reopening of the Strait of Hormuz, a key shipping route, sending oil sharply lower in early trading, with West Texas Intermediat down 5.05% at $80.59 a barrel, while international benchmark Brent crude was down 4.42% at $83.47 a barrel. Trump's announcement came amid renewed uncertainty over the weekend after exchanges of fire between Israel and Hezbollah raised doubts over whether the agreement would hold.
Saxo's Neil Wilson said: "Stocks soared and oil prices slid after the US and Iran agreed a peace deal to reopen the Strait of Hormuz. 'Ships of the World, start your engines. Let the oil flow!' President Trump posted. Iran confirmed the text of a memorandum of understanding had been finalised and said the war would end 'permanently and immediately on all fronts'. The two countries will sign the deal in a few days, in Switzerland, after the G7 leaders conference in France this week. The deal is seeing investors take some geopolitical risk premia off the table.
"Reopening the Strait significantly reduces inflation tail risks so we are seeing bond yields decline, but the realisation will dawn on markets that unwinding the Gordian knot of US-Iran relations will take time - energy prices will decline slowly rather than suddenly. Inflation remains elevated at the same time as optimism rises for the global economy, which means it's not a good time for the Fed to cut. Now is perhaps the time of maximum risk for the macro backdrop for equities. The Fed is set to leave interest rates on hold this week but we could get some signals about what is to come next. For starters, the FOMC could drop its easing bias from its statement. We don't know exactly how new chair Kevin Warsh is going to run things but do know that inflation is rising and the labour market remains incredibly robust."
On the macro front, June's NY Empire State manufacturing index was slated for publication at 1330 BST, while May capacity utilisation and industrial production figures will follow at 1415 BST, and the National Association of House Builders' June housing market index will follow at 1500 BST.
In the corporate space, Dave & Buster's will report earnings after the close.
US markets will be closed on Friday for the Juneteenth holiday.
Reporting by Iain Gilbert at Sharecast.com