Israel and Lebanon have agreed on the framework for a cease-fire deal to end over a year of violent conflict between Israel and Hezbollah, a senior U.S. official told Axios on Monday.
While the agreement awaits formal approval from Israel's Security Cabinet on Tuesday, global financial markets are already reacting, with gold and oil prices tumbling as geopolitical risks recede and risky assets soar amid improving investor optimism.
Both the Dow Jones Index and the S&P 500 indices hit fresh record highs minutes following Monday’s market open in New York.
Israel-Lebanon Deal: What It Includes
The cease-fire, if approved, would mark the end of a bloody chapter that has claimed the lives of over 3,500 Lebanese and 140 Israelis while displacing hundreds of thousands of people on both sides of the border.
Under the proposed agreement, Israel would initiate a 60-day withdrawal of its military from southern Lebanon, the Axios report said.
Simultaneously, the Lebanese army would deploy along border areas, and Hezbollah would relocate its heavy weaponry north of the Litani River.
To ensure compliance, a U.S.-led oversight committee would monitor the agreement, while the U.S. has pledged to support Israeli military action against imminent threats if Lebanese forces fail to act.
A senior U.S. official told Axios: "We think we have a deal. We are on the goal line, but we haven't passed it yet."
Oil, Gold Take A Blow
The news sent shockwaves through the commodities market.
With the threat of broader regional conflict subsiding, West Texas Intermediate (WTI) crude oil – as tracked by the United States Oil Fund (NYSE:USO) – fell 1.5% on Monday to $70 per barrel, almost fully paring back Friday’s gains.
Gold, tracked by the SPDR Gold Trust (NYSE:GLD) plunged over 3% to $2,640 an ounce as investors scaled back safe-haven bets. Silver followed suit, dropping 3% to $30.40 an ounce.
The U.S. dollar also softened, losing 0.7% against a basket of major currencies, reflecting the shift in risk sentiment.
Stock Market Soars To New Heights
The cease-fire optimism spilled into equities. The S&P 500 index – tracked by the SPDR S&P 500 ETF Trust (NYSE:SPY) –reached an all-time high of 6,020 points, gaining 0.8% on the day, while the Dow Jones Industrial Average – mimicked by the SPDR Dow Jones Industrial Average ETF (NYSE:DIA) – climbed 1% to a record-breaking 44,738.
Notably, all major S&P sectors except energy posted gains, with the broader index aiming for its sixth straight session of gains.
Israeli stocks – tracked by the VanEck Israel ETF (NYSE:ISRA) – soared 1.9%, also eyeing a six-day winning streak.
S&P 500’s top gainers during morning trading in New York included:
- Bath & Body Works (NYSE:BBWI)
- Super Micro Computer Inc. (NASDAQ:SMCI)
- Wolfspeed, Inc. (NYSE:WOLF)
- Clarivate Plc (NYSE:CLVT)
- Astera Labs, Inc. (NASDAQ:ALAB)
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