US President Donald Trump warned on Wednesday that the ceasefire agreement with Iran was not final and threatened military action if he disapproves of the deal, stating at the Group of Seven summit in France: "If I don't like it, we'll go back to shooting at them, dropping bombs on their head. If I don't like it, if they don't behave, we'll go right back to dropping bombs right smack in the middle of their head, OK?" The remarks came as G7 leaders welcomed the interim deal to end the war in Iran, while calling for an immediate ceasefire in Lebanon and pledging to diversify energy supply routes to reduce dependence on the Strait of Hormuz. The US-Iran agreement is expected to launch negotiations towards a final settlement to end the war, which has killed more than 7,000 people, mostly in Iran and Lebanon, as reported by Business Standard.
Asian stock markets surged on June 15 following the US-Iran peace deal announcement, with Japan's Nikkei index leading regional gains, soaring 5.3% as at 10am Singapore time, according to The Straits Times. South Korea's Kospi index jumped 5.1% and Hong Kong's Hang Seng Index was up 1.3%, while Singapore's Straits Times Index also joined the rally, climbing 1.3%. US stocks futures also rallied significantly, with those tied to the Dow Jones Industrial Average up 0.8% and S&P 500 futures climbing 1.1%, while Nasdaq 100 futures popped 1.8%, as reported by The Straits Times. The rally reflects continued investor optimism about the potential reopening of the Strait of Hormuz and lifting of the US blockade on Iran.
Oil prices experienced a sharp decline as markets reacted to the US-Iran peace deal, with Brent crude futures, the global oil benchmark, falling 4.3% to $83.59 a barrel as at 8.20am Singapore time, according to The Straits Times. US crude, West Texas Intermediate, slid 4.9% to $80.69, as reported by The Economic Times. Iranian state media reported that a draft memorandum of understanding includes a commitment by Washington to ease oil sanctions and a pledge by Tehran to reopen the Strait of Hormuz within 30 days, as reported by The Economic Times. Oil prices fell again on Wednesday on prospects for the reopening of the Strait of Hormuz, with Brent crude futures below $80, at their lowest level since the opening salvos of the US-Iran conflict, as reported by Business Standard. Kristina Clifton, senior currency strategist for the Commonwealth Bank of Australia, noted that it will take time for oil and gas flows to restart in full, stating that energy prices are not going to go back to pre-conflict levels for quite some time and it will take months rather than weeks for traffic to return to normal.
G7 leaders met in the French town of Evian-les-Bains to welcome the interim deal to end the war in Iran, with the memorandum of understanding signed by Washington and Tehran this week extending a ceasefire announced in April by another 60 days to allow them to negotiate a permanent truce. The leaders said they were ready to contribute to implementation of the accord, with a coalition led by Britain and France set to help secure shipping once the Strait of Hormuz reopens. The deal would reopen the Strait of Hormuz from Friday and end the US blockade of Iranian ports, as reported by Business Standard. In their statement, G7 leaders called for an "immediate robust ceasefire" in Lebanon and the disarmament of Hezbollah, with Iran saying the ceasefire must also end hostilities there and that a permanent deal must lead to an Israeli withdrawal. Israel, which was excluded from the US-Iran peace negotiations, says it will not withdraw and reserves the right to use military force, leading to Trump publicly berating Israeli Prime Minister Benjamin Netanyahu.
The US dollar continued its decline as news of the peace deal boosted demand for riskier assets, with the dollar index, which measures the greenback against a basket of currencies including the yen and euro, falling 0.3% to 99.492, the weakest level since June 5, as reported by The Straits Times. The risk-sensitive Australian dollar fetched US$0.7075, up 0.5%, while Imre Speizer, market strategist at Westpac, suggested that there will be a lot of 'wait and see' on how quickly the Strait really reopens and how long it takes for oil flow to get back to normal. Nick Twidale, chief market strategist with ATFX Global, expects the dollar to fall over the course of the next few sessions, with risk currencies like Aussie and yen likely to appreciate a little bit. The decline in oil prices is also feeding through to bond markets, with German government bond yields falling to their lowest levels in two weeks as investors reduce expectations for further ECB tightening.
Indian airline and travel stocks are poised for attention following reports of a U.S.-Iran deal to end the war and reopen the Strait of Hormuz, according to The Economic Times. Shares of major airlines such as InterGlobe Aviation, the parent of IndiGo, and SpiceJet, as well as online travel firms like Ixigo and Easy Trip Planners, will be in focus on Monday after US President Donald Trump and Iran's deputy foreign minister said an initial agreement had been reached. Trump wrote on his Truth Social platform: "The Deal with the Islamic Republic of Iran is now complete. Ships of the world, start your engines. Let the oil flow", adding that vessels would be able to pass through the Strait of Hormuz 'toll free' and that a U.S. naval blockade of Iranian ports would be lifted. Pakistan, which acted as a mediator between the two sides, said the U.S. and Iran would sign a memorandum of understanding in Switzerland on Friday, as reported by The Economic Times. The US-Iran agreement is expected to launch negotiations towards a final settlement to end the war, which has killed more than 7,000 people, mostly in Iran and Lebanon.
