Markets rally on Iran ceasefire

Key takeaways

Stock markets bounced on Friday as hopes of a Middle East ceasefire improved and oil prices relented. The successful launch of the giant SpaceX IPO also boosted investor sentiment.

Market sentiment improves as peace beckons
Oil prices fell over 7% as, despite a series of military exchanges, the prospect of a lasting ceasefire in the Iran war drew closer. Even though US consumer and ‘factory gate’ inflation numbers for May were stronger than expected, the news was sufficient for US stock markets to grind higher. The tech giants still lagged though, with the ‘Magnificent 7’ stocks declining more than 2.5%.

Ceasefire hopes also helped the price of government bonds to rise as oil fell below $85 a barrel on Friday, for the first time since the war began. A triumphal Sunday night post from President Trump claiming a deal to reopen the Strait of Hormuz amid an extended ceasefire was “now complete” triggered stock markets to rise on Monday morning, with Europe’s Stoxx 600 Index hitting a new record high.

The US and Iran meet in Switzerland on Friday to sign the latest ceasefire agreement.

SpaceX blasts Musk into stratosphere
Elon Musk’s rocket-ship conglomerate, SpaceX, blasted off last week with an initial public offering (IPO) three times the size of anything seen before. This delivered a valuation of almost $1.8trn. Thanks to the highly oversubscribed offering, Mr Musk is now the world’s first trillionaire. At last week’s launch price, his SpaceX holding of 42% of the shares was worth over $866bn. These shares gained some 19% on Friday.

Musk retains 82% of the voting rights in SpaceX, and stands to acquire still more stock should he grow the valuation to $7.5trn and found a million-strong colony on planet Mars.
SpaceX has now replaced Tesla as the seventh-largest US company by market capitalisation. Mr Musk holds the keys to both vehicles and, thanks to recent changes in exchange rules, SpaceX will start trading on the Nasdaq 100 Index in just two weeks.

Decision time for central banks
Thanks to Eurozone inflation hitting 3.2% in May, the European Central Bank raised interest rates to 2.25% last week, making it the first G7 central bank to hike in response to the war in the Middle East. This week, three other G7 countries – Japan, the US and the UK – will set their interest rates.

On Tuesday, the Bank of Japan is expected to increase rates by 0.25% to 1%. Wednesday will see the first meeting of the US Federal Reserve (Fed) with the new chair, Kevin Warsh, at its helm. Despite his perceived support for cutting rates, it’s widely expected that the Fed will keep them unchanged at 3.5% to 3.75%. The Bank of England is also expected to hold interest rates (at 3.75%) thanks, in part, to warnings from the Bank that it can’t afford to be “trigger-happy”.

Market moves

• Global stock markets made modest progress on ceasefire hopes.
• European and UK stocks were the top performers; they benefitted most from the decline in oil prices.
• UK and US government bonds gained although the former remain in the red for 2026. Gold is also now in negative territory for the year.

What to look out for this week

• Central bank rate decisions are due from Japan and Australia on Tuesday, the US on Wednesday, and the UK on Thursday.

• The US sees retail sales numbers on Wednesday and new order numbers on Thursday.

• The UK publishes inflation and Retail Price Index numbers on Wednesday, earnings and payroll data on Thursday, and consumer confidence and retail sales figures on Friday.

Important Information

Handelsbanken Wealth is a trading name of Handelsbanken Wealth & Asset Management Limited which is authorised and regulated by the Financial Conduct Authority (FCA) in the conduct of investment and protection business and is a wholly-owned subsidiary of Handelsbanken plc. For further information on our investment services go to wealthandasset.handelsbanken.co.uk/important-information. Tax advice which does not contain any investment element is not regulated by the FCA. Professional advice should be taken before any course of action is pursued.

• Find out more about our services by contacting us on 01892 701803 or exploring the rest of our website: wealthandasset.handelsbanken.co.uk
• Read about how our investment services are regulated, and other important information: wealthandasset.handelsbanken.co.uk/important-information
• Learn more about wealth and investment concepts in our Learning Zone: wealthandasset.handelsbanken.co.uk/learning-zone/
• Understand more about the language and terminology used in the financial services industry and our own publications through our Glossary of Terms: wealthandasset.handelsbanken.co.uk/glossary-of-terms/

All commentary and data is valid, to the best of our knowledge, at the time of publication. This document is not intended to be a definitive analysis of financial or other markets and does not constitute any recommendation to buy, sell or otherwise trade in any of the investments mentioned. The value of any investment and income from it is not guaranteed and can fall as well as rise, so your capital is at risk.

We manage our investment strategies in accordance with pre-defined risk objectives, which vary depending on the strategy’s risk profile.

Portfolios may include individual investments in structured products, foreign currencies and funds (including funds not regulated by the FCA) which may individually have a relatively high risk profile. The portfolios may specifically include hedge funds, property funds, private equity funds and other funds which may have limited liquidity. Changes in exchange rates between currencies can cause investments of income to go down or up.

This document has been issued by Handelsbanken Wealth. For Handelsbanken Multi Asset Funds, the Authorised Corporate Director is Handelsbanken ACD Limited, which is a wholly-owned subsidiary of Handelsbanken Wealth, and is authorised and regulated by the Financial Conduct Authority (FCA). The Registrar and Depositary is The Bank of New York Mellon (International) Limited, which is authorised by the Prudential Regulation Authority and regulated by the FCA. The Investment Manager is Handelsbanken Wealth, which is authorised and regulated by the FCA.

Before investing in a Handelsbanken Multi Asset Fund you should read the Key Investor Information Document (KIID) as it contains important information regarding the fund including charges and specific risk warnings. The Prospectus, Key Investor Information Document, current prices and latest report and accounts are available from the following webpage: wealthandasset.handelsbanken.co.uk/fund-information/fund-information/, or you can request these from Handelsbanken Wealth or Handelsbanken ACD Limited:25 Basinghall Street, London EC2V 5HA or by telephone on +44 01892 701803.

Registered Head Office: 25 Basinghall Street, London EC2V 5HA. Registered in England No: 4132340