The Dow Jones Industrial Average soared to a new record close, fueled by optimism surrounding a potential peace agreement between the U.S. and Iran. This significant geopolitical development also influenced global markets, with Asian exchanges trading mixed and European stocks opening higher, while oil prices experienced a notable decline.
Stock futures saw minimal movement early Tuesday following a significant surge by the Dow Jones Industrial Average to a fresh record high. This rally was largely driven by optimism surrounding a potential peace agreement between the United States and Iran.
As of 3:19 a.m. ET, S&P 500 futures remained flat, while Nasdaq 100 futures dipped slightly by 0.1%. Futures tied to the Dow, however, posted a gain of 0.14%.
During the previous day's regular trading session, the blue-chip Dow index climbed an impressive 468.77 points, or 0.92%, establishing both a new record close and an all-time intraday high. The broader S&P 500 also rose, jumping 1.65%, and the technology-heavy Nasdaq Composite led gains with a substantial 3.07% increase.
Across Asia, market performance was mixed. Japan's Nikkei 225 hit an intraday record high, though the Topix index slipped 0.20%. South Korea's Kospi advanced 1.98% on Tuesday, while its small-cap counterpart, the Kosdaq, fell 1.55%. Hong Kong's Hang Seng Index declined 1.25%, with mainland China's CSI 300 showing a marginal uptick.
In Europe, the pan-European Stoxx 600 index commenced trading 0.25% higher, primarily boosted by strong performances in industrial and banking sectors.
These global market shifts followed President Donald Trump's announcement of a U.S.-Iran deal to end the conflict in the Middle East.
Pakistani Prime Minister Shehbaz Sharif confirmed that both nations have agreed to cease military operations on all fronts. An official signing ceremony is scheduled for Friday in Switzerland, though a senior Trump administration official indicated that a memorandum of understanding was already signed electronically on Sunday.
The president also revealed that the crucial Strait of Hormuz passageway would reopen on Friday, a development that saw oil prices fall nearly 5% on Monday. Vice President JD Vance later stated on CNBC's "Squawk Box" that the strait is expected to "be opened in a toll-free way for the long term."
"I would say overall, the market reaction was fairly positive," noted Keith Lerner, CIO and chief market strategist at Truist Wealth, on CNBC's "Closing Bell: Overtime." He added, "Even though the S&P 500 hasn't quite gotten back to where it was, underneath the surface it's telling you one of economic resilience. I expect things to be somewhat more choppy here in the near term, but again, it's hard to complain after we have had a pretty good move off the March lows and still hanging in there pretty well."
Investors on Tuesday morning will be closely monitoring May's housing starts, as well as export and import price indexes.
European stocks open higher as Iran peace plan dominates G7 summit
European equities started Tuesday's trading session on a positive note as investors awaited further details on the provisional Middle East peace agreement. This conflict resolution was a central topic of discussion at the G7 leaders' summit held in Évian-les-Bains, France.
The pan-European Stoxx 600 index registered a 0.25% gain shortly after 8:10 a.m. in London (3:00 a.m. E.T.).
Most regional sectors advanced, with industrial stocks climbing over 1% and banking shares adding 0.66%. Conversely, mining companies led declines, falling 0.53% in early trade.
All major European bourses showed gains, with Italy's FTSE MIB rising 0.59%, and France's CAC 40 increasing by 0.39%. In London, the FTSE 100 opened 0.22% higher, while Germany's DAX closely followed with a 0.21% gain in morning trading.
— Hugh Leask
Australia central bank keeps rates steady at 4.35% amid elevated inflation
The Reserve Bank of Australia opted to maintain its interest rates at 4.35% on Tuesday. However, the central bank indicated its readiness to implement rate hikes if necessary to fulfill its mandate of price stability and full employment.
Despite economic growth falling below expectations, inflation in Australia has exceeded the RBA's target range. The April inflation figure eased to 4.2% year-on-year but still remained above the central bank's desired 2% to 3% band.
The RBA noted, "Higher fuel prices have added directly to inflation and there are indications that this is passing through to the prices of other goods and services, so inflation is likely to remain high for some time."
—Lim Hui Jie
Bank of Japan hikes rates to highest since 1995 as yen declines to historic lows
On Tuesday, Japan's central bank raised its policy rate to 1%, marking its highest level in over three decades. This move aligns with expectations from economists polled by Reuters, signaling an acceleration of the policy normalization initiated in 2024.
This represents the Bank of Japan's first rate increase since December, when rates were moved to 0.75%, and the first time rates have reached 1% since 1995.
This policy tightening comes as Japan grapples with a depreciating yen and rising inflation, partly influenced by the recent Iran conflict.
—Lim Hui Jie
SoftBank Vision Fund CFO leaving company after a decade: Reuters
Navneet Govil, the chief financial officer of SoftBank Group's Vision Fund investment division, is departing the company after a decade, Reuters reported, citing an internal memo.
Further details regarding the transition of responsibilities are expected to be shared by Alex Clavel, CEO of SoftBank Investment Advisors, according to the memo.
— Justina Lee
China retail sales contract in May, posting first drop in over three years
China's retail sales experienced their first decline in over three years in May, indicating a deepening economic slowdown, according to data released Tuesday by the National Bureau of Statistics.
Retail sales, a key indicator of consumer spending, dropped 0.6% from a year earlier in May, marking the first decrease since December 2022. The Labor Day holiday at the beginning of May failed to stimulate sluggish consumer spending. This figure fell short of economists' forecasts for no change, as polled by Reuters.
Industrial output emerged as the sole positive point, rising 4.5% in May. This surpassed estimates of 4.3% growth and rebounded from April's nearly three-year low of 4.1%.
The national unemployment rate slightly decreased to 5.1% in May, down from 5.2% in April.
— Anniek Bao
South Korean defense stocks outperform broad market
South Korean defense sector stocks saw significant gains on Tuesday, outperforming the broader market, despite the U.S. and Iran reaching a peace agreement.
Hanwha Aerospace, Seoul's largest defense firm, surged over 10%, while Hyundai Rotem, manufacturer of the K2 main battle tank, climbed 11%.
LIG Defense & Aerospace notably spiked over 28%, nearly reaching the daily 30% price limit on the Kospi. This company produces the Cheongung air defense system, which made its combat debut in the United Arab Emirates during the Iran conflict.
— Lim Hui Jie
South Korea's Kospi extends winning run, rising 2%
Asia-Pacific markets displayed mixed performance early Tuesday, with South Korea's Kospi leading the gains.
The Kospi advanced 2.01% at the open, while the small-cap Kosdaq fell 0.56%. Japan's Nikkei 225 added 0.18%, though the Topix slipped 0.39%.
Hong Kong's Hang Seng index futures were last observed at 24,799, lower than the index's closing value of 24,842.67.
—Justina Lee
Asia-Pacific markets set to open mixed as investors assess Iran-U.S. deal
Asia-Pacific markets were poised for a mixed opening on Tuesday, as investors evaluated the Iran-U.S. deal aimed at ending the war in the Middle East.
Japan's Nikkei 225 was expected to rise, with its Chicago futures contract at 69,545 and its Osaka counterpart last trading at 69,750, compared to the index's Monday close of 69,317.50.
Hong Kong's Hang Seng index futures were last at 24,799, below the index's closing value of 24,842.67.
In Australia, futures last traded at 8,827, while the S&P/ASX 200 had closed at 8,914.
The U.S. and Iran struck a preliminary deal, though "a lot" of details still need to be finalized, according to Vice President JD Vance on Monday, who added that America holds "all the cards."
The U.S.-Iran ceasefire is slated for a 60-day extension, establishing a framework for future negotiations concerning Tehran's nuclear program and other critical issues. The text of the preliminary agreement has not yet been released.
Iranian Foreign Minister Abbas Araghchi and Parliamentary Speaker Mohammad Bagher Ghalibaf are anticipated to participate in the upcoming discussions, Vance informed CNBC's "Squawk Box." He also told CNBC that Washington expects the Strait of Hormuz to be open "toll free" for the long term.
—Justina Lee
Seven of the 11 GICS sectors rise on Monday
On Monday, seven of the 11 Global Industry Classification Standard (GICS) sectors concluded the trading session with gains.
Information technology stocks led the market higher, with the sector climbing 3.39%. Communication services and consumer discretionary stocks were the second and third best performers, respectively gaining 2.42% and 1.91%.
Conversely, energy stocks declined due to the potential peace deal between the U.S. and Iran, with the sector shedding 3.58%. Real estate, healthcare, and consumer staples also finished in negative territory, declining 0.90%, 0.70%, and 0.53% respectively.
— Lisa Kailai Han
Shares of Dave & Buster's Entertainment plunge after revenue miss
Shares of Dave & Buster's Entertainment plummeted nearly 12% on Monday, following the entertainment chain's release of its first-quarter results.
For its most recent quarter, the company reported revenue of $559.2 million, falling short of analysts' FactSet poll consensus of $580.6 million. Dave & Buster's also posted GAAP earnings of 16 cents per share, significantly below both its year-ago figure of 62 cents and FactSet's consensus estimate of 60 cents per share.
— Lisa Kailai Han
Stock futures open little changed
Stock futures traded largely flat on Monday night.
Shortly after 6 p.m. ET, futures linked to all three major indexes showed minimal change.
— Lisa Kailai Han
