US stock indices experienced a significant rally on Monday, with the Nasdaq Composite climbing more than 3%. This surge followed comments from President Trump indicating the Strait of Hormuz is "partially open" and will be fully open by Friday. Shares of SpaceX (SPCX.US) continued their upward trajectory, gaining nearly 20% after a 19% surge on their debut last Friday, propelling the company's market capitalization to $2.52 trillion.
US Market Performance
At the close, the Dow Jones Industrial Average advanced 468.77 points, or 0.92%, to 51,671.03. The Nasdaq Composite jumped 795.09 points, or 3.07%, to 26,683.94. The S&P 500 index rose 122.83 points, or 1.65%, to 7,554.29. SpaceX (SPCX.US) gained close to 20%, with its market value surpassing $2.5 trillion. NVIDIA Corp (NVDA.US) increased over 3%, and Oracle Corp (ORCL.US) rose more than 4%. The Nasdaq Golden Dragon China Index closed up 0.3%, with iQIYI, Inc. (IQ.US) gaining nearly 2%.
European Market Performance
Germany's DAX 30 index rose 282.44 points, or 1.15%, to 24,895.00. The UK's FTSE 100 index fell 39.98 points, or 0.38%, to 10,431.74. France's CAC 40 index gained 33.14 points, or 0.40%, to 8,384.01. The Euro Stoxx 50 index increased 41.72 points, or 0.67%, to 6,229.35. Spain's IBEX 35 index advanced 271.38 points, or 1.45%, to 19,035.78. Italy's FTSE MIB index rose 342.29 points, or 0.66%, to 51,839.50.
Asian Market Performance
Japan's Nikkei 225 index surged 4.99%. South Korea's KOSPI index jumped 5.2%. India's SENSEX index gained 0.97%.
Currency Market Movements
The US Dollar Index, which measures the greenback against a basket of six major currencies, fell 0.12% to settle at 99.631. In late New York trading, one euro was worth $1.1595, up from $1.1575 previously. One British pound traded at $1.3419, higher than the prior $1.3416. One US dollar bought 160.31 Japanese yen, up from 160.24 yen. One dollar was worth 0.7940 Swiss francs, down from 0.7968. One US dollar exchanged for 1.3987 Canadian dollars, up from 1.3980. One dollar traded for 9.3913 Swedish krona, lower than the previous 9.4215.
Cryptocurrency Market Update
Bitcoin rose 1.5% to $66,408. Ethereum gained over 5%, reaching $1,808.
Commodities Trading
The price of light, sweet crude for July delivery on the New York Mercantile Exchange fell $4.13 to settle at $80.75 per barrel, a decline of 4.87%. August Brent crude on the ICE Futures Europe exchange dropped $4.16 to close at $83.17 per barrel, down 4.76%.
Precious Metals
Spot gold broke through the $4,300 level, trading at $4,308.93. Spot silver was at $70.003.
Key Economic Developments
US spot petrochemical prices have retreated as the Iran-related risk premium is gradually unwound. Prices softened last week as easing tensions between the US and Iran impacted export demand, though operational issues along the Gulf Coast limited further declines. US ethylene prices fell 4.1%, and polymer-grade propylene (PGP) dropped 9.8%. Traders noted that declining export demand continues to pressure the market as geopolitical risk premiums linked to the conflict with Iran fade. Prices for both products remain above pre-war levels, having spiked earlier due to transport disruptions of key feedstocks and chemicals through the Strait of Hormuz, which tightened global supply and boosted demand for US products. Despite the price drop, the price of para-di-tert-butylbenzene remained stable at 63.5 cents per pound. Over 70% of this chemical is used in synthetic rubber for tires, and it remains one of the most resilient products in the petrochemical sector this year.
PGIM anticipates three interest rate hikes this year, with a policy reversal in 2027. The US asset manager holds a contrarian view that the Federal Reserve will raise rates three times this year to curb an overheating economy, then reverse those hikes in 2027. The firm had previously forecast rate cuts this year in April. PGIM stated the US economy is "exceptionally strong" and inflation remains stubbornly high, requiring a new response. Given this backdrop and the Fed's five-year failure to hit its 2% target, PGIM expects three hikes this year to bolster the central bank's credibility and anchor inflation expectations. PGIM noted that "if the hikes are described as 'precautionary' measures against supply-side inflation and recent volatility in long-term Treasuries, then Warsh will gain political support." However, PGIM expects the Fed "to reverse those hikes relatively quickly, with three cuts in 2027 and another in 2028, for a terminal rate of 3.375%—below the current rate and likely near neutral."
The US Strategic Petroleum Reserve has fallen to its lowest level in 43 years. As the Trump administration nears completion of a plan to release 172 million barrels from the SPR to ease fuel price spikes triggered by the Iran war, the nation's emergency crude stockpile has dropped to its lowest level since 1983. Data released Monday by the US Department of Energy shows the SPR, established after the 1970s Arab oil embargo, has fallen to roughly 340 million barrels, nearing a historic low. If the plan is completed, it would be the second-largest release in the reserve's history, leaving it with about 243 million barrels, only about one-third of its authorized capacity. The dwindling inventory reduces US flexibility to respond to future supply disruptions. A department spokesperson stated the administration is managing the reserve as intended—to help stabilize oil markets, protect the US from supply disruptions, and make the nation more energy secure.
Trump stated that following the signing of a US-Iran agreement on Friday, the text will be released, and he emphasized that the key points are falling oil prices and rising stock markets. During a meeting with French President Macron, Trump said the Strait of Hormuz will be fully open on Friday, and the agreement has been fully signed electronically. The text of the Iran agreement will be released after Friday. He stressed that sanctions on Iran will not be lifted until it fulfills its obligations. He himself may or may not participate in signing the agreement, while US Vice President Vance will participate. Trump expressed a desire for good relations with Iran and stated there will be strong oversight. He was clear that Iran will not possess nuclear weapons. Additionally, Trump stated he genuinely wants to resolve the Lebanon issue. He emphasized that what is important is that oil prices have fallen significantly while the stock market is rising.
The IMF has warned that the global economy still faces repercussions from the Middle East war. The International Monetary Fund stated it remains "highly vigilant" about the impact of the Middle East war on the global economy, warning that restoring energy supplies will take time even after the US and Iran announced an agreement to reopen the Strait of Hormuz. IMF Managing Director Kristalina Georgieva wrote in a blog post on Monday, "It is comforting that the global economy has been able to withstand the shock so far, but we must not let our guard down. Commodity prices, inflation and expectations, and financial conditions have all been affected, but not yet to a degree that signals a global economic slowdown." Georgieva noted that the shock from energy shortages over recent months has been cushioned to some extent by technological advances, particularly investments in artificial intelligence and data centers. "The US is benefiting from this global technology cycle, as are some Asian economies with faster growth in tech exports. However, most countries have not yet truly felt the productivity and growth boost from technological progress, raising concerns about further divergence in the global economy."
UBS stated that the US-Iran agreement reduces pressure on the Fed to hike rates, with the next move likely being a rate cut in 2027. Leslie Falconio, Head of Taxable Fixed Income Strategy at UBS Global Wealth Management, said that following the US-Iran agreement announcement, oil prices fell and the US Treasury market strengthened, easing pressure on the Fed to hike rates this year. Falconio stated, "Even before the ceasefire agreement was reached, oil prices had started to fall, but the two-year Treasury yield was still rising because the market had priced in an almost 100% probability of a hike in December. Now, with oil prices falling, the market is gradually unwinding those hike expectations. Hence, the two-year yield is starting to fall." New Fed Chair Warsh will preside over his first interest rate decision this week. Against the backdrop of soaring crude prices reigniting inflation pressures, voices within the FOMC supporting a rate hike this year have increased. Falconio said she expects the FOMC to formally remove its easing bias at this week's meeting, making the policy outlook more hawkish. However, she still believes the Fed's next move will be a rate cut, and that it will occur in 2027.
US homebuilder confidence fell to a low in June, with the South region a significant drag. US homebuilder confidence deteriorated further in June due to rising mortgage rates and construction material costs, alongside a sharp deterioration in sentiment in the South region. Data released Monday by the National Association of Home Builders and Wells Fargo showed the Housing Market Index, which measures overall conditions, fell 2 points to 35 this month, below market expectations. Confidence in the South, the largest US homebuilding region, recorded its biggest drop since November 2023. The NAHB noted that June marks the 14th consecutive month the index has been below 40, the longest such streak since 2011-2012. Among sub-indices, the index for current sales conditions fell 2 points to 38, while measures for future sales expectations and buyer traffic were flat. The association attributed the overall index decline partly to rising material prices, increased financing costs, and regulatory factors hindering home construction.
Notable Corporate News
NVIDIA Corp (NVDA.US) issued investment-grade bonds for the first time in five years, attracting orders totaling $85 billion. NVIDIA is expected to raise $25 billion through the bond offering, with demand exceeding three times the intended issuance size, highlighting investors' eagerness to gain exposure to the AI theme. According to sources familiar with the matter, the bond offering attracted orders as high as $85 billion. Other sources indicated NVIDIA will issue bonds in seven tranches with maturities ranging from 2 to 30 years. Sources said the yield on the longest-dated bond was priced at approximately 0.65 percentage points above comparable US Treasury yields. The proceeds will be used for purposes including refinancing existing debt. This marks NVIDIA's first investment-grade bond issuance in five years.
Michael Saylor announced that MicroStrategy Incorporated (MSTR.US) has increased its dollar reserves to $11 billion. The founder of MicroStrategy stated on social media that the company recently purchased 1,587 bitcoins for approximately $100 million, bringing its total bitcoin holdings to 846,842. Simultaneously, the company increased its dollar reserves by $1 billion to approximately $11 billion, further strengthening its liquidity reserve capacity. This move shows that while continuing to accumulate bitcoin, MicroStrategy is also expanding its cash position to enhance the liquidity and risk resilience of its balance sheet. To date, MicroStrategy remains one of the largest publicly traded companies globally by bitcoin holdings.
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