Instant View: Markets cheer deal but see staying elevated

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June 15 : Stocks and bonds rallied and the dollar fell in Asia trade on Monday after the U.S. and Iran agreed a peace deal to re-open the Strait of Hormuz and lift a U.S. blockade on Iran.

U.S. crude futures fell more than 4 per cent, S&P 500 futures rose about 0.8 per cent and the dollar was down broadly, lifting the yen to 159.7 per dollar and the euro to $1.1616.

Here are market analysts' comments on the deal:

JASON WONG, SENIOR MARKETS STRATEGIST, BNZ, WELLINGTON:

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"This has been well anticipated, that's why I think the market reaction can be pretty well contained. What you see on your screens today - we're probably most of the way there now."

"It's a good sign, hopefully we can put this behind us and focus on macro-economic forces...the market will assume things will gradually return to normal. It's no longer a risk overhanging the market."

NICK TWIDALE, CHIEF MARKET STRATEGIST, ATFX GLOBAL, SYDNEY:

"I think we'll see the dollar fall over the course of the next few sessions. We'll probably see some of the risk currencies like Aussie and yen appreciate a little bit. But I don't think we're going to see any huge moves.

"There's going to be a lot of wait and see, on how quickly the Strait really reopens and how long it's going to take for oil flow to really get back to normal. It's certainly going to be months rather than weeks.

"I don't think we're going to see $70 oil too quickly."

KRISTINA CLIFTON, SENIOR CURRENCY STRATEGIST, COMMONWEALTH BANK OF AUSTRALIA, SYDNEY

"It's obviously good news for the global economy that the Strait of Hormuz will reopen. It has been our view, though, that it's going to take some time for oil and gas flows to restart in full. Markets will be focused on how traffic is returning...and seeing how quickly production can come back online.

"It is our view that energy prices are not going to go back down to the levels that they were pre-conflict for quite some time...and it's going to take a while for traffic to go back to normal as well."

MAHJABEEN ZAMAN, HEAD OF FX RESEARCH ANZ, SYDNEY:

"This good news has been expected for some time now, and markets have been inching, waiting, with some of the positive vibe already embedded in pricing.

"Looking at cyclical FX, I think there is room for upside from where it is right now. You may see (oil) break $80 on just, you know, happy days today...but then maybe the market will realise that, oh, wait a minute, maybe the terms of the deal may not be as lucrative. We also think that oil prices will remain a little bit on the higher side only because infrastructure has been damaged."

CHRIS WESTON, HEAD OF RESEARCH, PEPPERSTONE, MELBOURNE:

"It looks credible and it looks enough for the market to move on. We're looking now at what Hormuz looks like in terms of the ramp-up of cargo and logistics through the channel, given there have been some structural changes (and) damage to refineries.

"I think there's going to be a lot of other risk assets which are going to try to move on other factors such as the ramp-up of demand, people are looking at earnings again and central bank expectations this week.

"I think the trade is short volatility here. And that's going to allow risk to come on...a further decline in long-end bond yields would be certainly quite welcome for equity risk."

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