Global Stock Markets Surge, Crisis in the Middle East Eases

Last week, stock prices on global markets surged significantly, with indices on Wall Street reaching record levels as investors believe that the US and Iran will soon reach a peace agreement.

On Wall Street, the Dow Jones index rose 3.2% last week to 49,447 points, while the S&P 500 jumped 4.5% to 7,126 points, and the Nasdaq increased by 6.8% to 24,468 points.

The strong growth of the world’s largest stock market for the third consecutive week is attributed to positive news from the Middle East.

Israel and Lebanon agreed to a ten-day ceasefire, and US President Donald Trump announced that Iran has offered in peace negotiations not to possess nuclear weapons for more than 20 years.

Trump also stated that the US and Iran are ‘very close’ to an agreement.

– Markets have risen based on positive news from the Middle East. For the past month and a half, trading has exclusively depended on news about the war with Iran – says Chris Zaccarelli, director at Northlight Asset Management.

In the early weeks of the US and Israel’s war against Iran, stock prices on the world’s largest stock market sharply fell, but thanks to investors’ hopes for a peace agreement, stock indices have recovered all those losses in recent weeks, with the S&P 500 and Nasdaq reaching record levels these days.

This is also due to a sharp decline in oil prices last week after Iran announced the opening of the Hormuz Strait, a key passage for the export of ‘black gold’ from the Middle East.

Thanks to the drop in oil prices, investors’ fears of rising inflation and slowing economic growth have eased.

Last week, investors also focused on the quarterly business results of American companies and banks, most of which reported better results than analysts expected.

European stock markets also saw rising stock prices last week. The London FTSE index strengthened by 0.6% to 10,667 points, while the Frankfurt DAX jumped 3.8% to 24,702 points, and the Paris CAC rose 2.0% to 8,425 points.

The dollar weakened against a basket of currencies for the second consecutive week

On global markets, the value of the dollar against a basket of currencies fell last week as, thanks to hopes for a peace agreement between the US and Iran, investors are once again more inclined towards riskier investments.

The dollar index, which shows the value of the US dollar against six major world currencies, fell by 0.5% last week to 98.23 points.

At the same time, the dollar weakened by 0.4% against the European currency, bringing the euro exchange rate to 1.1765 dollars. The price of the US currency also fell against the Japanese yen by 0.4% to 158.60 yen.

In March, the dollar significantly strengthened against most major world currencies as investors sought refuge for their capital in safer investments due to the crisis in the Middle East.

However, in the last two weeks, the dollar has weakened thanks to positive news from the Middle East.

Israel and Lebanon agreed to a ten-day ceasefire, and US President Donald Trump announced that Iran has offered in peace negotiations not to possess nuclear weapons for more than 20 years.

Trump also stated that the US and Iran are ‘very close’ to an agreement.

In the early weeks of the US and Israel’s war against Iran, the dollar exchange rate rose sharply as investors’ appetite for riskier investments fell, leading them to seek refuge for their capital in government bonds and currencies considered safer investments in uncertain times.

However, as the end of the crisis in the Middle East looms, investors’ appetite for risk has strengthened again, leading to a significant rise in stock prices on global markets in recent weeks, while the dollar has weakened.

Moreover, expectations are gradually rising that the US central bank may indeed lower interest rates by the end of this year to stimulate economic growth.

Due to rising inflation in the US, until recently, no one expected a rate cut, and now the money market estimates that there is about a 50% chance that the Fed will lower interest rates in December.