Stock futures rise as US presents peace plan to Iran, crude prices fall

US stock futures rose on Wednesday (March 25) after a report that the United States has given Iran a plan to end the conflict, sending crude prices lower. Futures tied to the Dow Jones Industrial Average gained 406 points, or 0.8%. S&P 500 futures rose 0.8%, while Nasdaq 100 futures advanced 0.9%.

A 15-point peace proposal from the US fanned optimism among traders that President Donald Trump is serious about winding down the war that has upended energy markets around the world. Still, Iran has yet to comment on the proposal and so far has kept up attacks on neighbouring states, leaving some investors skeptical that a ceasefire will materialise.

In US pre-market trading, miners such as Newmont Corp and Freeport-McMoRan Inc were among the biggest gainers. Arm Holdings Plc jumped 12% on plans to generate about $15 billion annually within five years from chip sales.

Also Read: Trump says Iran made a major energy-related gift to the US

In the bond market, Treasury yields rose and upped the pressure on financial markets worldwide. Higher yields make mortgages and other kinds of borrowing more expensive for households and for businesses, which slows the economy. They also hurt prices for all kinds of investments, from stocks to gold to cryptocurrencies.

Gold’s price sank again and settled at $4,402.00 per ounce, down roughly $1,000 from a high point early this month. Its price has dropped despite its reputation as a safe harbour for investors during scary times.

Treasurys paying more in interest make gold, which pays its owners nothing, look worse in comparison, and investors have lost some of the fever that drove gold prices to records earlier this year. The yield on the 10-year Treasury climbed to 4.39% from 4.34% late Monday and from just 3.97% before the war.

Also Read: US-Iran contacts underway; Tehran open to 'sustainable' proposals to end war, says report

The yield on the two-year Treasury, which more closely tracks expectations for what the Federal Reserve will do with overnight interest rates, rose to 3.92% from 3.83% late Monday.

The Fed came into this year with expectations of resuming its cuts to interest rates, which would give the economy a boost. But oil prices have jumped so much and the threat of high inflation is so large that traders have nearly erased their bets for a cut to rates this year.

Instead, some are even betting on the possibility that the Fed may have to hike rates this year, according to data from CME Group. That was a nearly unthinkable scenario before the war began.

Also Read: US President Donald Trump says Iran agrees to no nuclear weapons as talks continue