Global stock markets adopted a more cautious tone heading into the weekend after a strong weekly advance, as relief over a provisional U.S.-Iran peace agreement gave way to concerns about securing a lasting deal.
Following the best weekly performance for the benchmark since late May, S&P 500 futures declined as U.S. markets were closed for the Juneteenth holiday. The Europe Stoxx 600 index fell 0.2%, while Asian shares retreated 0.3% from record highs.
Talks for a permanent agreement, originally scheduled for Friday in Switzerland, have been postponed. According to informed sources, the delay was due to overnight clashes in Lebanon between Israeli forces and Iran-backed Hezbollah militants.
A U.S. official stated that Israel and Hezbollah have now agreed to a ceasefire effective from 4 p.m. local time. Iran has made a ceasefire in Lebanon one of the conditions of its preliminary agreement with the United States.
Brent crude oil rose 0.9% to above $80 per barrel, paring its weekly loss of 7.7% through Thursday. Traffic through the Strait of Hormuz appeared sparse on Friday, following a surge in the waterway's volume the previous day. Concurrently, Tehran stated that vessels transiting the strait require its permission.
These developments tested the market's optimism, which had gained further momentum after the U.S. and Iran lifted their months-long dual blockade of the Strait of Hormuz, fueling a tech-led rally. Friday's talks were intended to initiate a 60-day negotiation window to reach a permanent agreement on Iran's nuclear activities.
"Of course, with Trump involved, there can always be some turbulence along the way, but we believe we have entered a new phase of de-escalation," said Alexandre Drabowicz of Indosuez Wealth Management. He advised investors not to rush to conclusions about a permanent deal.
U.K. government bond yields led gains in European debt markets after Greater Manchester Mayor Andy Burnham secured a parliamentary seat, paving the way for a potential challenge to Prime Minister Keir Starmer. Investors are debating whether a Burnham premiership could lead to a shift toward more relaxed fiscal policy.
The British pound outperformed most major currencies, while the U.S. dollar held steady near its highest level since March. Bitcoin ended a three-day losing streak. Gold fell for a third consecutive week, trading around $4,150 per ounce.
Global equities are poised to conclude a pivotal week marked by the landmark provisional U.S.-Iran agreement, the first policy meeting chaired by Federal Reserve Chair Kevin Warsh, and the early performance of SpaceX as a public company. Market resilience has been partly supported by enthusiasm surrounding artificial intelligence.
Strategists have raised their year-end targets for the S&P 500 index, citing reduced disruptions from the Iran conflict and improved earnings prospects. The average target has been lifted to 7,716 from 7,612 in May. This represents a nearly 3% premium to the last closing price, implying a year-to-date gain of close to 13%. Earnings expectations for this year and next have also been revised upward.
"Markets appear to be entering a rare period of several weeks without major catalysts," said Roberto Scholtes, Head of Strategy at Singular Bank. "Hopefully, this offers a chance to catch a breath after a frenetic year and could also be a period of sector rotation."
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