Financial markets rallied on June 16, 2025, buoyed by reports that Iran is seeking to de-escalate tensions with Israel and reopen nuclear negotiations. The FTSE 100 index in London closed at 8,875 points, just shy of its all-time high, while U.S. indices also posted gains. The Dow Jones Industrial Average rose by 317 points to 42,515.09, the S&P 500 climbed 0.9%, and the Nasdaq advanced 1.5% .
Oil prices, which had spiked due to earlier conflicts, fell by over 3% to $71.79 per barrel, alleviating fears of significant disruptions in global oil supply . This decline in oil prices contributed to the positive sentiment in equity markets.
The easing of market tensions followed reports that Iran, through Arab intermediaries, expressed readiness to resume nuclear negotiations with Israel, provided the United States stays out of the fighting . Iranian officials conveyed to Israel that confining the conflict is beneficial to both nations. However, Israeli Prime Minister Benjamin Netanyahu remains committed to dismantling Iran’s nuclear and missile capabilities.
The G7 Summit in Canada was dominated by diplomatic efforts to de-escalate tensions. A draft joint statement from the Group of Seven (G7) leaders called for the de-escalation of the conflict between Israel and Iran, emphasizing the importance of maintaining market stability, particularly in energy markets, and affirming Israel’s right to self-defense . U.S. President Donald Trump has not yet approved the draft.
Despite the positive market response, analysts cautioned that prolonged conflicts could still impact global economic stability. The potential for broader regional conflict remains, particularly if Iran perceives regime change as a threat, potentially shifting strategies toward maximum resistance . Markets are also concerned about the possibility of Iran blockading the Strait of Hormuz—a key oil transit route—which could severely disrupt supplies as U.S. summer demand peaks.
Investors are hopeful that backchannel diplomacy could avert a broader regional crisis and economic instability. However, the situation remains fluid, and markets will continue to monitor developments closely.
