US Futures Rally, Oil Slips as Trump Signs Deal: Markets Wrap

A foreign exchange dealer works inside the Woori Bank trading room in Seoul, South Korea, on Thursday, May 7, 2026. South Korea's equity market has overtaken Canada's as the worlds seventh largest, propelled by insatiable demand for chips powering artificial intelligence. Photographer: SeongJoon Cho/Bloomberg Photo by SeongJoon Cho /Bloomberg

Article content

(Bloomberg) — US equity futures climbed and oil prices retreated as President Donald Trump signed an interim deal to end the war with Iran and reopen the Strait of Hormuz, helping improve risk sentiment after the Federal Reserve’s hawkish hold.

Article content

Contracts on the S&P 500 jumped as much as 0.9% while Nasdaq futures rallied 1.5%. The moves followed a 1.2% decline in the US benchmark on Wednesday after the Fed signaled rates may need to rise further to contain inflation. Brent crude fell more than 1.5%, dropping toward $78 a barrel. A gauge of Asian stocks rose for a fifth day while Japan’s Nikkei 225 climbed almost 2%.

Article content

Article content

Article content

“The positive surprise for equities came from Trump’s signing of the Memorandum of Understanding with Iran,” said Rajeev De Mello, global macro portfolio manager at Gama Asset Management. “While markets had already been pricing a gradual normalization of shipping through the Strait of Hormuz, there had remained a meaningful risk of a last-minute collapse in negotiations. The agreement substantially reduces that tail risk.”

Article content

Article content

Trump told reporters he signed the document at the palace of Versailles near Paris. The MOU is now in effect, a US official said. However, it was unclear if Iran had immediately begun taking steps to fully reopen the strait.

Article content

The yield on 10-year Treasuries fell four basis points to 4.45% after rising about five basis points following the Fed decision. The two-year Treasury yield, which is highly sensitive to policy expectations, retreated two basis points to 4.16% after jumping 13 basis points in the previous session. Still, yields on Australian and Japanese 10-year bonds edged higher on Thursday.

Article content

Optimism that the US-Iran deal may ease geopolitical tensions and reduce the risk of further disruptions to global energy supplies has provided another tailwind for global equities. The asset class has largely shrugged off the turmoil sparked by the war and continued to notch record highs on the back of relentless enthusiasm for artificial intelligence.

Article content

Article content

Bond investors, however, face the prospect of lingering inflationary risks that may keep the higher-for-longer rates narrative intact. Even though oil prices have eased, pressure on inventories remains acute. Stockpiles at Cushing, the largest US commercial storage hub, have sunk to about 20 million barrels, a level traders consider an operational minimum.

Article content

Central banks in Indonesia and the Philippines — two economies hit hard by the energy shock — are both expected to raise their policy rates by a quarter-point each on Thursday, according to the majority of economists surveyed by Bloomberg. Taiwan’s central bank is forecast to leave rates unchanged.

Article content

Most emerging Asian currencies, including the rupiah and the peso, weakened against the dollar on Thursday. In Japan, the yen fell to its weakest level against the US dollar since July 2024, raising the risk of official intervention. Investors remain concerned the central bank is not tightening policy quickly enough to contain inflation and stabilize the currency, even after it raised its benchmark rate to the highest level since 1995 earlier this week.