Tokyo [Japan], June 15, (ANI): Investors welcomed the peace agreement reached between the US and Iranian negotiators as shares in Asia climbed, hoping for a durable peace in West Asia. Investors cheered the news of the reopening of the Strait of Hormuz, which has been blockaded due to the US-Iran conflict.
US President Donald Trump announced on Truth Social that a deal with Iran is now complete. The memorandum of understanding between the two sides is scheduled to be signed on Friday in Switzerland.
Oil prices reacted immediately to the peace agreement, sliding more than 4 per cent as Brent fell below USD84. Higher energy prices have rattled investors who feared that inflationary pressures would spark a round of interest rate hikes.
“Ships of the world, start your engines," Trump said.
Inflation in major advanced economies is running hot, with consumer sentiment taking a hit as higher gasoline prices ripple through other sectors. US consumer inflation for May came in at a three-year high of 4.2 per cent, triggering fears that the US Federal Reserve could consider a rate hike.
Japan’s Nikkei closed trading on Monday at a record high, topping 69,000, rising 5 per cent, while Korea’s KOSPI rose more than 5 per cent.
The reopening of the critical Strait of Hormuz, which carried around a fifth of the world’s supplies of oil and gas before the conflict began, will be closely monitored as the chokepoint’s closure led to a shortfall that will be hard to bridge at least in the immediate future.
A number of central banks will decide on key interest rates this week, including the US Federal Reserve and Bank of England. Kevin Warsh, the newly-appointed Fed chair, will preside over his maiden policy even as odds of a rate cut this year have mostly faded.
The US Federal Reserve and the Bank of England are expected to leave interest rates unchanged, WSJ reported. (ANI)
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