Selling pressure in the markets due to attacks by Israel and Iran threatening peace talks in the region weakened amid rising optimism that the war might not spiral out of control, as the parties involved in the Middle East conflict decided to pause actions.
US President Donald Trump said the process of reaching a deal with Iran is proceeding positively and that he is expecting to declare victory in the next two weeks, alleging that the American side won the war.
Trump revealed he warned Israeli Premier Benjamin Netanyahu, during a call, that if mutual attacks escalate into a regional war, Israel may be isolated against Iran.
Assets classified under war pricing saw increased volatility amid easing tensions, as Brent crude fell to $93.4 per barrel Monday and is trading at $92.4 on Tuesday, down 1.1%.
The US 10-Year Treasury reached 4.59% on Monday, stabilizing at 4.56% Tuesday amid pullback in oil prices.
The US dollar, having strengthened against other currencies due to inflation risks and its safe-haven feature coming to the fore amid the heightened conflict, eased with tensions subsiding.
On June 5, the US Dollar Index rose above 100 for the first time since April 7, closing Monday with a limited decline, and is at 99.9, down 0.1% in the new trading session Tuesday.
Meanwhile, all eyes turn to the initial public offerings (IPOs) in the US capital markets.
Following SpaceX’s plan to submit documents for the IPO, ChatGPT-maker OpenAI also submitted documents for its IPO -- if approved, the IPO is expected to push the firm’s valuation above $1 trillion.
The developments on the artificial intelligence (AI) side sustained investor interest in AI firms.
Analysts said the public offerings of large-scale tech firms with massive growth potential could boost the depth of capital markets.
At the same time, short-term inflation estimates among US consumers fell to 3.5% in May, according to a survey published by the New York Fed.
As for the corporate front, chipmaker stocks saw a recovery.
Micron Technology shares rose nearly 10%, Broadcom gained 3% and Nvidia increased 2%.
The S&P 500 rose 0.3% and the Nasdaq 0.86%, while the Dow fell 0.16% Monday. American indexes opened Tuesday positive.
European stock markets were mixed as the volatility due to geopolitical risks in the Middle East continues to keep investors in Europe on their toes.
A slight pullback in oil and rising tech stocks supported risk appetite across the markets in the bloc.
The European Central Bank (ECB) is expected to hike rates Thursday, while estimates for a rate cut have been pushed back from March 2027 to mid-2027.
The bank is also expected to make downward revisions to growth forecasts.
Germany’s factory orders fell at nearly twice the expected rate in April amid global uncertainty and shrinking demand stemming from the Middle East conflict.
The German economy could contract in the second quarter, especially due to challenges in the auto industry.
The investor confidence index in the eurozone continued its upward trend for the second consecutive month in June.
The FTSE 100 rose 0.05% and the FTSE MIB 30 0.63%, while the DAX 40 fell 0.58% and the CAC 40 0.23% on Monday. European indexes started Tuesday mixed.
A positive trend came to the fore in Asia except for Hong Kong.
The recovery in the US and Europe influenced Asian stock markets.
Investors in South Korea are reflecting positive developments in the tech and AI sectors in their pricing.
China’s trade balance posted a surplus of $105.4 billion in May, while exports surged 19.4% and imports 27.4% during the same period.
China’s ability to find alternative markets amid the outbreak of the US-Israel-Iran war contributed to its positive data.
Domestic demand remained weak regardless.
The Nikkei 225 rose 2.2%, the Kospi Index 7.5%, and the Shanghai Composite Index 0.6%, while the Hang Seng Index fell 0.3%.
*Writing by Emir Yildirim
