Progress in US-Iran ceasefire talks sends oil prices and Treasury yields lower

As hopes revived for a ceasefire deal between the United States (US) and Iran, international oil prices and U.S. Treasury yields, which had surged, both fell. As a result, the three major New York stock market indexes all rebounded, with technology stocks and artificial intelligence (AI) semiconductor shares leading the gains. In particular, NVIDIA's earnings report, released after the market close, once again beat Wall Street expectations, reaffirming the market's optimism about AI.
■ Easing yields on hopes for US-Iran talks
On the 20th local time, the DJIA closed at 59.35, up 1.31% from the previous session. Investor sentiment, which had recently been shaken by Middle East risks and a sharp rise in yields, recovered, allowing the index to reclaim the 50,000 level on a closing basis for the first time in about three months.
The S&P 500 Index rose 1.08% to 7,432.91, while the NASDAQ Composite Index gained 1.55% to close at 26,270.36. The SOX also jumped 4.5%.
The biggest factor weighing on the market recently had been concern that the war in the Middle East would drag on. Even after the ceasefire, the US and Iran continued to exchange military threats, sending international oil prices and U.S. Treasury yields sharply higher. That fueled worries about inflation and interest rates. However, when US President Donald Trump said, "We are in the final stages regarding Iran," hopes for a ceasefire deal were revived. The Government of the Islamic Republic of Iran also confirmed that it had received a new proposal from the US and was reviewing it. The fact that indirect talks were continuing through Pakistan was also seen as a positive signal by the market.
As a result, international oil prices fell sharply. Brent Crude Oil futures for July delivery closed at $105.02 per barrel, down 5.63% from the previous session, while West Texas Intermediate crude oil (WTI) for July delivery ended at $98.26, down 5.66%.
U.S. Treasury yields also turned lower. The 30-year U.S. Treasury yield, which had briefly surged to 5.20% the previous day, its highest level since 2007 on the eve of the Global Financial Crisis (GFC), fell 6.6 basis points to 5.114% on the day. The benchmark 10-year U.S. Treasury yield also dropped 10 basis points to 4.569%.
Although the market staged a relief rally on the day, tensions in the Middle East have not been fully resolved. Iran has set up a "controlled zone" around the Strait of Hormuz and announced a prior-approval system for ships, leaving another lingering risk factor.
■ NVIDIA posts a surprise earnings beat
NVIDIA's earnings report, released after the market close, once again exceeded expectations and fueled enthusiasm for AI investment. The world's most valuable company said revenue for the first quarter of fiscal 2025, from February to April, came to $81.62 billion, or about 122 trillion won. That was up 20% from the previous quarter's $68.13 billion and surged 85% from a year earlier.
The figure also topped the market forecast of $78.85 billion compiled by LSEG. With that, NVIDIA has set a new all-time quarterly revenue record for 12 consecutive quarters.
Its outlook for the second quarter was also strong. NVIDIA projected revenue of as much as $91 billion for the next quarter. Jensen Huang, Chief Executive Officer (CEO) of NVIDIA, said, "Building AI factories is the largest infrastructure expansion in human history," adding, "NVIDIA supports every cloud and every AI model. It is the only scalable platform wherever AI is produced."
km@fnnews.com Kim Kyung-min Reporter