Oil Prices Plunge, U.S. Stocks Hit Record Highs, Gold and Silver Rally Together

Market Overview

Markets were driven by easing geopolitical tensions after the United States and Iran reached a framework agreement on navigation through the Strait of Hormuz. The decline in Middle East risk premiums pressured oil prices, with WTI crude falling 4.03% to $81.46 and Brent crude down 4.10%.

Improved risk sentiment lifted global equities. The Nasdaq surged 3.07%, while the Dow Jones Industrial Average closed at a record 51,671. Semiconductor and memory-chip stocks led gains, with Western Digital jumping 16% and Micron Technology rising 10%.

Precious metals also rallied as a weaker U.S. dollar and lingering safe-haven demand supported prices. Spot gold climbed 2.16% above $4,310, while silver gained 2.88%.

Chinese equities posted strong gains, led by AI and computing-related sectors. The ChiNext Index surged 5.30%, while Treasury yields and the U.S. dollar both moved lower. Investors now turn their attention to policy decisions from the Bank of Japan and the Reserve Bank of Australia, along with key Chinese economic data.

Oil Prices Drop as Geopolitical Risks Ease

A framework agreement between the U.S. and Iran significantly reduced concerns over disruptions in the Strait of Hormuz, causing a sharp decline in oil's geopolitical premium. WTI crude settled at $81.46 and Brent crude at $83.75.

Adding to downward pressure, the U.S. plans to release approximately 172 million barrels from the Strategic Petroleum Reserve, easing supply concerns. Meanwhile, U.S. manufacturing output was unchanged in May, missing expectations and highlighting softer industrial activity.

U.S. Equities Extend Record Rally

The Nasdaq rose 3.07% to 26,684, the S&P 500 gained 1.65% to 7,554, and the Dow closed at an all-time high of 51,671.

Technology and semiconductor stocks led the advance. Western Digital surged 16%, Micron gained 10%, AMD rose 7%, and Meta added 4.77%.

NVIDIA raised $25 billion through its first bond offering in five years, attracting demand more than 3.4 times the issue size, reflecting strong investor confidence in the AI sector.

Gold and Silver Benefit from Softer Dollar

Spot gold rose 2.16% to above $4,310, while silver climbed 2.88% to $69.97 per ounce.

U.S. Treasury yields moved lower, with the 10-year yield falling to 4.47% and the 2-year yield declining to 4.06%. The U.S. Dollar Index slipped 0.14% to 99.66, while the VIX volatility index dropped to 16.2, indicating reduced market anxiety.

Chinese Stocks Rally on AI Momentum

Chinese equities advanced across the board. The Shanghai Composite gained 1.61%, the Shenzhen Component Index rose 3.79%, and the ChiNext Index jumped 5.30%.

AI infrastructure, computing hardware, and semiconductor-related sectors outperformed. Strong demand for memory and computing capacity helped boost investor confidence, while trading volumes increased across major mainland exchanges.

Market OutlookOil Market Focus

Investors will closely monitor implementation of the U.S.-Iran Strait of Hormuz framework agreement and the pace of shipping normalization. Combined with planned U.S. strategic petroleum reserve releases, these developments could continue influencing oil-price volatility in the near term.

Central Bank Week

The Bank of Japan is expected to raise interest rates by 25 basis points, bringing the policy rate closer to 1%. Markets will also watch for guidance on future tightening and the outlook for the Japanese yen.

China will release May Industrial Production, Retail Sales, and Fixed Asset Investment data, providing insight into domestic demand and economic recovery. The Reserve Bank of Australia will also announce its latest policy decision.

Key Events to Watch (GMT+8)

China (10:00 AM)

• Industrial Production (May)

• Retail Sales (May)

• Fixed Asset Investment (May)

Bank of Japan

• Interest Rate Decision

• Market expects a 25-basis-point rate hike

Reserve Bank of Australia

• Interest Rate Decision

United States (8:30 PM ET)

• Housing Starts (May)

• Building Permits (May)

Later This Week

• Federal Reserve policy meeting

• Continued focus on recent CPI and PPI inflation data

• Updates on the U.S.-Iran Strait of Hormuz agreement and its impact on energy markets and global shipping