US stocks opened higher on Friday as investors welcomed signs of a potential peace agreement between the United States and Iran.
Meanwhile, attention turned to the highly anticipated market debut of Elon Musk’s SpaceX, which is expected to become the largest public listing in Wall Street history.
The Dow Jones Industrial Average gained 257 points, or 0.51%, while the S&P 500 rose 0.12%.
The Nasdaq Composite on the other hand fell by 0.11%.
The gains followed reports that a draft memorandum of understanding between the US and Iran could pave the way for the reopening of the Strait of Hormuz and the lifting of US oil sanctions on Iran.
According to Iranian state media, the proposed agreement includes commitments from both sides, although Tehran indicated that a final decision has yet to be made.
A separate report from Bloomberg said a peace deal could be signed in Switzerland as early as Sunday.
The prospect of easing tensions in the Middle East helped boost investor confidence after weeks of market volatility driven by concerns over energy supplies and geopolitical risks.
Global markets rally on peace deal optimism
The improving outlook for the Middle East lifted equity markets around the world.
Japan’s Nikkei 225 surged 2.8%, South Korea’s Kospi jumped 4.6%, and India’s Nifty 50 gained 1.3%. China’s Shanghai Composite advanced more than 1%, while Europe’s Stoxx 600 climbed 1.7%.
The positive mood followed Thursday’s strong rally on Wall Street, when major indexes gained after President Donald Trump said planned military strikes against Iran had been canceled and suggested a diplomatic agreement was nearing completion.
Oil prices also retreated after Trump’s remarks.
Earlier concerns about a disruption to energy supplies had pushed crude prices sharply higher, contributing to inflation concerns and uncertainty about the Federal Reserve’s interest-rate outlook.
Following the decline in oil prices, traders pushed back expectations for the next Federal Reserve rate hike to December from October, according to CME Group’s FedWatch tool.
SpaceX prepares for historic market debut
Investor attention is also firmly focused on SpaceX, which is expected to begin trading on the Nasdaq under the ticker symbol SPCX.
The company has priced its shares at $135 each, implying a valuation of approximately $1.77 trillion.
SpaceX plans to sell 555.6 million shares, raising a record $75 billion in what would be the largest initial public offering ever completed in the United States.
Reuters reported that the offering was nearly four times oversubscribed despite only about 3% to 4% of the company’s shares being available for public trading.
Investors weigh opportunities and risks
Despite enthusiasm surrounding the IPO, some market participants have expressed concerns about the impact such a large offering could have on broader markets.
Some analysts believe recent weakness in technology stocks and last week’s sharp decline in bitcoin may partly reflect investors raising cash ahead of the SpaceX debut.
Wells Fargo Investment Institute cautioned that large IPOs can create temporary market disruptions.
“History indicates that large IPO issuance occurs during periods of strong equity market sentiment, but the added equity supply can cause some indigestion. Household equity exposure already sits close to an all-time high, which suggests they may sell existing holdings to fund these new positions,” wrote global equity strategist Douglas Beath.
He added: “We remain favorable on the AI theme and the Information Technology sector but would not chase this run up.”
While investors assess the implications of the record-breaking IPO, markets appear to be ending the week on a stronger footing as hopes for a diplomatic breakthrough in the Middle East offset concerns about inflation, energy prices, and equity valuations.
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