Market Update: Stocks, Oil Surge Following U.S. Withdrawal from Iran Deal

President Trump’s exit from the Iran nuclear deal has triggered a chain reaction in the financial markets, with oil prices hitting multiyear highs and stocks following up with their strongest performance of the month.

Stocks Resume Uptrend

All of Wall Street’s major indexes scored big gains on Wednesday, with the technology-focused Nasdaq Composite Index reaching its highest level since March. The tech-laden average jumped 1% to close at 7,339.91.

The broader S&P 500 Index advanced 1% to 2,697.79, with nine of 11 sectors contributing to the gains. Energy stocks surged more than 2%, while financials, materials and tech shares added more than 1%.

The Dow Jones Industrial Average added 182.33 points, or 0.8%, to close at 24,542.54. General Electric Co (GE), DowDuPont (DWDP) and Exxon Mobil (XOM) were the biggest percentage gainers.

A measure of expected volatility known as the CBOE VIX declined on Wednesday to its lowest level since January, a signature of renewed stability in the financial markets. The so-called “fear index” fell 8.8% to close at 13.42 on a scale of 1-100 where 20 represents the historic average.

Oil Prices Surge

With economic sanctions expected to derail Iranian crude shipments, oil prices rose on Wednesday to their highest level since 2014.

The West Texas Intermediate (WTI) benchmark for U.S. crude futures reached a high of $71.36 a barrel on the New York Mercantile Exchange. The contract last traded at $71.24 for a gain of $2.18, or 3.2%.

ICE Brent futures for June delivery surged $2.39, or 3.2%, to $77.24 a barrel.

On Tuesday, President Donald Trump announced he was withdrawing the United States from the 2015 Iran nuclear deal. For Iran, this means the resumption of economic sanctions that could hinder its re-integration into the global financial system.

With Trump voiding the agreement, Boeing and Airbus are expected to lose tens of billions in contracts with Iranian carriers. The value of Boeing’s lost contracts is said to be worth $20 billion.

Cryptocurrencies Trade Sideways

Wednesday trading was marked by consolidation in the cryptocurrency market, as bitcoin and Ethereum rebounded from heavy losses earlier in the session. All cryptos in circulation were valued at $436 billion, relatively unchanged from 24 hours ago, according to CoinMarketCap.

Bitcoin touched a session low of $8,979 before rebounding to trade above $9,300 on the major exchanges. Meanwhile, ether prices hovered near $755 after a brief drop below $710.

On Tuesday, a company founded by Cameron and Tyler Winklevoss was awarded a patent claim by the U.S. Patent and Trademark Office for a system that fulfill transactions for exchange-traded products (ETPs) holding cryptocurrencies. The application, which was first filed in December, is part of the Winklevoss brothers’ ongoing push for the first cryptocurrency exchange-traded fund (ETF).

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Chief Editor to and Contributor to, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi