The first high-level talks between the US and Iran took place in Switzerland and concluded on Monday. Qatar and Pakistan acted as mediators. According to them, the parties agreed on a 60-day plan that should lead to a final agreement under the Islamabad memorandum.
A High-Level Committee will also be created. It will assume political oversight of the process, while the main negotiators will supervise separate groups: on the nuclear program, sanctions, and disputed issues.
Another important point: a communication channel to prevent incidents. It is needed to reduce risks in the Strait of Hormuz and ensure the safe passage of commercial vessels.
A separate coordination group with the participation of the US, Iran and Lebanon will monitor the cessation of military operations in the region.
Technical negotiations will continue until the end of the week in Bürgenstock.
What to Expect From the Market Opening
The joint statement removed the main fear investors had going into Monday. On Sunday, reports emerged that the Iranian delegation had allegedly left the talks. After that, the market immediately started talking about a possible ‘Black Monday.’ Both oil and cryptocurrencies came under pressure.
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Oil will be the first to react to the news. For the market, the key detail is the communication channel for the Strait of Hormuz. If it truly reduces the risk of supply disruptions, oil prices may continue to retreat.
A similar reaction already happened after the memorandum on June 14. Then oil fell by more than 12%, and the Dow Jones index hit a new all-time high. The new mechanism for Hormuz could amplify this effect if investors believe it will work not just on paper.
Stocks may also get support. Cheaper oil reduces inflationary pressure and improves company profit expectations. Through this same channel, the news also affects the crypto market.
During the conflict, bitcoin moved almost in sync with overall risk appetite. It rose during de-escalation and fell after new strikes. Before trading opened on Monday, BTC was holding around $64,200.
But a strong rally may be limited by the Fed. After the regulator’s tough stance on June 17, stocks and cryptocurrencies quickly lost part of the gains they had made after the memorandum.
The main risk now is Lebanon. The coordination group with the participation of the US, Iran and Lebanon will be the first serious test of the agreement. Iranian Foreign Minister Abbas Araghchi has already called it ‘the first real test.’
If hostilities resume there, investors may again start leaving risky assets. In that case, stocks, cryptocurrencies, and other risky assets will come under pressure again.
