Optimistic expectations about the Iran-U.S. agreement drive oil prices sharply down, with risk currencies strengthening

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Golden Finance reported that on May 25, as market optimism about reaching an agreement to restart the Strait of Hormuz shipping route and resume crude oil transportation heated up, risk appetite rebounded. Oil prices and the US dollar both fell, while US stock index futures rose. WTI crude oil dropped more than 5% in early trading, and risk-sensitive currencies such as the Australian dollar and the South African rand led gains against the US dollar. S&P 500 index futures also rose; earlier, the benchmark index had closed last Friday just short of its all-time high. A senior US official said on Sunday that the US and Iran are close to reaching an agreement to restart the Strait of Hormuz, but both sides are still consulting on key wording, and final approval may still take several days. Iran’s semi-official Tasnim News Agency issued a warning, saying the draft agreement could fall apart because the US is creating obstacles on some key provisions, including Iran’s demand to unfreeze its assets. IG Sydney analyst Tony Sicomore wrote in a client report that last Friday’s market “upward momentum appears set to continue.” Although any agreement could still unravel, “for now, financial markets appear inclined to believe these reports.” (Jin10)
SPYX-0.11%
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