Israel-Lebanon ceasefire boosts markets, oil falls

Global financial markets experienced a significant shift on Thursday as news of a ceasefire agreement between Israel and Lebanon sparked a sell-off in oil prices and a rotation into safe-haven assets. The agreement, announced late Wednesday, raised hopes for a broader de-escalation in the Middle East, including a potential diplomatic resolution to the ongoing U.S.-Iran conflict.

Oil Plunges on Ceasefire Optimism

International benchmark Brent crude fell more than 3% to $95.23 per barrel, while U.S. West Texas Intermediate crude also dropped sharply. The decline was driven by expectations that the ceasefire could lead to the reopening of the Strait of Hormuz, a critical chokepoint for global oil shipments that has been disrupted by the Iran conflict. However, analysts caution that the situation remains fragile, with Israeli Prime Minister Benjamin Netanyahu stating that Israel and the U.S. are prepared to attack Iran again if necessary.

Gold Rises as Dollar and Yields Slide

Gold prices gained more than 1%, with spot gold climbing 0.8% to $4,466.89 per ounce. The rally was fueled by a weaker U.S. dollar and falling bond yields, as the ceasefire optimism reduced demand for safe-haven currencies. Independent metals trader Tai Wong noted that gold is holding above its 200-day moving average, but record highs remain unlikely without a lasting ceasefire with Iran that opens the Strait of Hormuz. The dollar index fell 0.2% to 99.28, retreating from a two-month high, while the 10-year Treasury yield eased.

Currency Markets: Yen in Focus

The Japanese yen hovered near the critical 160 level against the dollar, prompting vigilance over potential intervention by Japanese authorities. The dollar slipped from a two-month high as the ceasefire news reduced safe-haven demand. The euro rose 0.3% to $1.163, supported by expectations that the European Central Bank will raise its deposit rate to 2.25% on June 11. The British pound also gained 0.2% to $1.344. Meanwhile, the risk-sensitive Australian dollar edged up slightly to $0.714 after Australia's trade balance swung back to surplus.

Equity Markets Mixed

European stocks closed higher, with the pan-European Stoxx 600 finishing 0.4% higher, reversing morning losses. In the U.S., the Dow Jones Industrial Average rose 1.7%, while the S&P 500 was up 0.2%, after snapping a nine-day winning streak. Asian markets tracked Wall Street losses overnight, pressured by renewed U.S.-Iran tensions.

Crypto and Quantum Computing

Bitcoin ETFs saw their longest outflow streak on record, with $4.4 billion in withdrawals over 13 days, as risk appetite waned. Separately, Honeywell's Quantinuum raised $1.68 billion in its U.S. IPO, pricing shares at $60, signaling strong investor demand for quantum computing.

Outlook

Investors now await the U.S. employment report for May, which could provide clues on the Federal Reserve's monetary policy path. The ceasefire deal, while boosting near-term sentiment, remains contingent on Hezbollah's compliance and broader Iran peace talks. Markets are likely to remain volatile as geopolitical risks persist.

1. Oil prices fell over 3% on Israel-Lebanon ceasefire, with hopes for Strait of Hormuz reopening.
2. Gold rose 0.8% as dollar and bond yields declined, but record highs hinge on Iran deal.
3. Dollar index slipped from two-month high; yen near 160 level raises intervention risk.
4. European stocks closed higher; U.S. equities mixed after S&P 500 snap winning streak.
5. Bitcoin ETFs saw record outflows of $4.4 billion over 13 days; Quantinuum IPO raised $1.68B.

Sources: CNBC Daily Open, CNBC Iran War Worries, CNBC Gold Rises, CNBC Dollar Yen, CNBC European Stocks, CoinMarketCap Bitcoin, CNBC Quantinuum.