Daily Summary – Oil Slides Along with Indices Despite Illusory Hopes for Peace

🌍 Geopolitics

• Conflicting signals are hitting the market regarding US-Iran negotiations aimed at ending the war and restoring energy flows through the strategic Strait of Hormuz.

• President Donald Trump stated he is "not satisfied" with the progress of the talks, dampening expectations for a swift agreement.

• The White House dismissed Iranian media reports of a draft interim agreement—under which strait traffic would allegedly return to normal within a month—as a "complete fabrication" and flatly denied the claims.

• Donald Trump added that no one will control the strait and that the US will watch over it. He also noted that Tehran's $24 billion in frozen assets will only be returned when Iran starts "behaving properly," which remains a primary sticking point alongside the issue of free passage through Hormuz.

• US Secretary of State Marco Rubio indicated that the coming hours and days will show whether progress is possible, adding that special envoy Steve Witkoff, Jared Kushner, and Vice President JD Vance are heavily involved in the talks.

🇺🇸 US Stock Market (Wall Street)

• Major Wall Street indices notched losses after an initial leg up at the opening bell, snapping a streak of near-daily historic highs seen in recent weeks. During the session, the US500 contract (S&P 500) dipped by about 0.1%, and the US100 contract (Nasdaq 100) slid 0.3%, while the US30 contract (Dow Jones) gained around 0.4%.

• Big banks led the declines, while the rally for previously surging chipmakers ground to a halt. The tech sector saw its largest retail capital outflow since December last week, according to BofA Securities data.

• Goldman Sachs analysts raised their year-end forecast for the S&P 500 to 8,000 points (up from 7,600), citing an exceptionally strong Q1 earnings season. They join Morgan Stanley and Deutsche Bank, which are also targeting the 8,000 mark.

• Corporate spotlight: Shares of JPMorgan Chase & Co. and other major banks fell following Jamie Dimon's remarks at the Bernstein conference, where he suggested that 2026 costs might slightly exceed forecasts while Net Interest Income (NII) guidance remains unchanged. Meanwhile, Bank of America expects sales and trading revenues to grow by about 15% YoY in Q2.

• Boeing Co.’s CEO offered an optimistic outlook, forecasting increased production of the 737 Max, certification of delayed models, and tailwinds from defense spending. Elsewhere, Salesforce Inc.’s earnings after the closing bell could determine whether the stock breaks out of its recent stagnation.

• Ahead of the highly anticipated market debut of SpaceX, FTSE Russell amended its fast-entry rules for large companies into its main indices.

• Lululemon Athletica Inc. agreed to appoint three new board members, ending a long-running dispute with founder Chip Wilson, while Blackstone Inc. will provide up to $1.3 billion in financing for Apogee Therapeutics Inc.

🇪🇺 European and British Stock Markets

• Europe's Stoxx 600 index closed flat, erasing earlier gains under the weight of geopolitical headlines. The tech sector (Stoxx Tech Index) shed 1.2%, led down by semiconductor stocks.

• The blue-chip Eurostoxx 50 index ticked up 0.11%, but EU50 futures are currently trading down 0.23%.

📈 Macroeconomics and Bonds

• US mortgage rates climbed to their highest level since August, leading to a drop in mortgage applications for the week ending May 22.

• Investors are eyeing Thursday's personal income and Personal Consumption Expenditures (PCE) data, as well as Friday's retail inventories reports.

• US 10-year Treasury yields held steady at 4.49%.

• Germany's 10-year bond yields sat at 2.99% (virtually unchanged), while UK yields fell by two basis points to 4.86%.

💱 Currencies

• The EURUSD pair remained stable at 1.1623, though earlier, driven by a sharper pullback in oil, it flirted with its highest levels since mid-May (1.1660).

• The British pound slid 0.2% against the dollar to $1.3421.

• The Japanese yen weakened 0.2% against the greenback, reaching 159.54 on the USDJPY pair.

🛢️ Commodities

• Crude oil prices suffered sharp declines following a wave of volatility. US crude (WTI) tumbled 4.3% to $89.5 per barrel, slipping below the psychological $90 threshold.

• Notably, due to Monday's holiday, the DOE inventory report was not released today, while the API report is due after the closing bell.

• Iranian state television indicated that, according to the draft agreement, a return to normalcy in the Strait of Hormuz could happen just a month after signing. However, at the same time, the volume of ships transiting either legally or with transponders turned off has dropped compared to last weekend.

• Gold prices dropped by up to 1.2% today, touching $4,450—its lowest level since late March.

• Natural gas prices returned to a strong rally, gaining nearly 4% today to trade above $3.1/MMBTU.

₿ Cryptocurrencies

• Bitcoin recorded a decline of around 1.5%, trading at the $74,800 mark.

• Ethereum is shedding 1%, dropping to around $2,050.

Despite the oil slide, the price of gold decreased to the lowest since end of March. Source: xStation5