Markets Retreat as U.S.-Iran Peace Framework Uncertainty Lingers

Hello, this is Leonie Kidd writing to you from London. Welcome to today's edition of the Daily Open newsletter.

The relief rally was short-lived.

Uncertainty around the status and content of the U.S.-Iran peace framework has crept into market sentiment.

Over the past 24 hours, the White House has had to confirm that a structure for a peace deal has been signed, ahead of a formal signing set to take place on Friday, but it's also had to deny that the U.S. is paying Iran $300 million, which U.S. President Donald Trump says is "Fake News."

Investors have chosen the cautious path today, prompting stocks across the world to retreat from record highs.

What you need to know today

U.S. President Donald Trump will meet his G7 counterparts today as his memorandum of understanding with Iran goes under the microscope with other world leaders.

The framework has been met with both relief and concern, as the international community has been quick to welcome the end of hostilities, but raised questions over the conditions and details of the agreement.

Early indications suggest traffic through the Strait of Hormuz could rise to nearly 50% of pre-war levels within a month, according to Kpler analysts.

But other aspects of the deal are more contentious, with the president taking to Truth Social to challenge reports that the administration would pay Tehran $300 million, calling it "Fake News, put out by the Dumocrats!!!"

Futures in both the U.S. and Europe are just in the red, while it's a mixed session across Asia Pacific. It marks a retreat from Monday's sharp gains, which took stock markets across the globe to record highs.

Also influencing today's trade, the Bank of Japan has hiked rates to 1%, the highest level since 1995. The policy tightening comes at a time when Japan has been struggling with a weak yen and inflation that has started to creep up, partly due to the Iran war.

Meanwhile, the Reserve Bank of Australia has warned hikes are not off the table, as policy-makers opted to keep rates on hold at 4.35%.

There are also some economic warning signs from China, where retail sales marked their first drop in over three years, while other indicators also contracted in May.

In corporate news, SpaceX shares rallied in the first full day of trading following Friday's record-breaking IPO. But across online investing forums, retail investors complained of small allocations and seemed split on whether to hold or sell the stock.

AI darling Nvidia is planning its first debt sale of the AI boom, with a source with knowledge of the matter indicating the company could look to raise at least $20 billion.

CNBC has also learned that Anthropic will meet with Trump administration officials to try and resolve the export control directive that has suspended access to its AI models Fable 5 and Mythos 5 for "foreign nationals."

— Leonie Kidd

And finally...

How the World Cup spending boom is also an opportunity for income investors

As millions of soccer fans descend on stadiums in the United States for the World Cup to cheer on their teams, few are thinking about the makeovers the host cities underwent to handle the crowds. Most of those were financed with the help of municipal bonds.

The U.S. is hosting 78 games across 11 cities, which started Friday and run through mid-July. Federal funding helped the cities prepare for the big event, but much of the capital investment required will be funded by cities and states — and that is where municipal bonds come in, Dan Close, head of municipals at Nuveen, said in a recent report.

Yet while events like the Olympics used munis to fund projects that weren't used beyond the specific games, the World Cup investments will have a longer lasting impact, Close said in an interview with CNBC.

— Michelle Fox