Oil Slides as SpaceX Extends Post-IPO Rally

Oil fell again after Monday’s sharp drop as markets weighed the US-Iran deal and the possible reopening of the Strait of Hormuz. SpaceX rose strongly after hours, lifting its market value above $2.6 trillion, while Nvidia announced a $25 billion bond sale. The FTSE 100 saw modest gains, while the dollar held near 10-day lows and sterling traded at $1.339.

Equities

The FTSE 100 closed 0.1% higher on Monday at 10,481.76, while the FTSE 250 gained 0.6%, as lower oil prices supported sentiment across several sectors. Brent crude fell nearly 5% after the United States and Iran reached a preliminary agreement aimed at ending their three-month conflict and reopening the Strait of Hormuz.

BP shares fell 3.4% and Shell declined 4.3% on Monday as the sharp drop in crude prices weighed on energy producers. In contrast, travel-related stocks benefited from lower fuel costs. Wizz Air climbed 5.6%, helping lift the broader travel and leisure sector by 1.6%.

Homebuilders also moved higher, with Persimmon advancing 3.0% and Bellway adding 2.6%. Precious metals producers led gains across the London market as investors continued to favour gold and silver. Fresnillo jumped 10.1%, while Hochschild Mining rose 7.8%.

Bunzl closed 1.4% higher after reports that activist investor Elliott had built a stake of almost 5% in the distribution group. Semiconductor manufacturer IQE surged 20.9% after announcing an agreement with Tower Semiconductor to develop optical connectivity solutions. Frasers Group fell 2.0% after launching a takeover offer for Australia’s Accent Group.

In the United States, Wall Street rallied strongly on Monday. The S&P 500 climbed 1.7% to 7,554.29, the Dow Jones Industrial Average rose 0.9% to a record closing high of 51,671.03, and the Nasdaq Composite jumped 3.1%, marking its strongest daily gain since late March.

Technology shares led the advance. Nvidia closed 3.5% higher, while Micron Technology surged 10.5% after at least two brokerages raised their price targets for the memory-chip maker. The Philadelphia Semiconductor Index gained more than 5% and finished at a record closing high.

SpaceX shares soared 19.6% in their second trading session following the company’s blockbuster stock market debut. The shares finished at $192.46, well above their IPO price of $135, pushing the company’s valuation beyond $2 trillion.

Fox shares dropped 16.8% after announcing a $22 billion acquisition of Roku. Roku fell 1.9% following the deal announcement. United Airlines rose 3.9% as lower oil prices improved the outlook for fuel costs, while Norwegian Cruise Line gained 3.7% and Carnival added 3.2%.

Forex & Commodities

The US dollar held near 10-day lows early on Tuesday, with the dollar index at 99.76, as traders assessed the preliminary US-Iran agreement and looked ahead to central bank decisions. The euro traded at $1.158 after touching a 10-day high of $1.162 on Monday, while sterling bought $1.339 early on Tuesday.

The yen remained under pressure at 160.3 per dollar early on Tuesday, giving up earlier gains after the Bank of Japan raised interest rates to a 31-year high. The move was widely expected, but the 7-1 vote pointed to some caution over the timing of any further increases. Traders are now watching Deputy Governor Shinichi Uchida’s comments for guidance on the pace of future tightening.

The Australian dollar fell early on Tuesday to $0.7050 after the Reserve Bank of Australia left interest rates unchanged following three consecutive hikes. The decision was unanimous, although the central bank said inflation remained too high and that it could raise rates again if needed.

Spot gold rose 0.3% early on Tuesday to $4,317 an ounce, extending gains towards a fourth straight session. The metal was supported by a weaker dollar and lower expectations of a US rate hike later this year, with traders now waiting for the Federal Reserve’s decision on Wednesday, the first under Chair Kevin Warsh.

Oil extended Monday’s sharp fall early on Tuesday as markets weighed the possible reopening of the Strait of Hormuz. Brent crude fell 0.5% to $82.72 a barrel, while West Texas Intermediate slipped 0.3% to $80.51. Prices had fallen nearly 5% on Monday to their lowest close since 4 March after the US-Iran agreement was announced, although a permanent truce has not yet been finalised.