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Asian stock markets surged on Monday while the U.S. dollar weakened and oil prices fell sharply after reports confirmed that the United States and Iran had reached a peace agreement. The development boosted investor confidence, improved global risk sentiment, and raised hopes for lower inflationary pressures worldwide.
Pakistani Prime Minister Shehbaz Sharif announced on social media that a deal had been finalized, while U.S. President Donald Trump stated that the agreement included reopening the strategically important Strait of Hormuz. However, specific details of the arrangement were not disclosed. Iran later indicated that shipping traffic through the waterway would be jointly regulated with Oman, creating some uncertainty about future trade conditions and potential transit fees.
Despite the lack of clarity, financial markets reacted positively. Analysts noted that the prospect of stable shipping routes and lower energy prices outweighed concerns about the new regulatory framework. Brent crude oil dropped 4% to $83.80 per barrel, significantly below its May peak of $126.41. U.S. crude futures also declined 4.3% to $81.23 per barrel.
The sharp decline in oil prices eased inflation concerns and reduced pressure on central banks ahead of a busy week of monetary policy meetings. Central banks in the United States, United Kingdom, Japan, Australia, Switzerland, Sweden, Norway, and Russia are all scheduled to announce policy decisions, with the Bank of Japan viewed as the most likely to raise interest rates.
Equity markets welcomed the news. S&P 500 futures climbed 0.8%, while Nasdaq futures gained 1.4%. Japanese equity futures jumped 2%, reflecting stronger risk appetite among investors.
Currency markets also reacted. The euro rose 0.4% against the U.S. dollar to $1.1608, while the British pound advanced 0.3% to $1.3446. The dollar slipped 0.2% against the Japanese yen.
Lower bond yields further supported precious metals, with gold rising 1.4% to $4,280 per ounce. Investors will now focus on upcoming central bank decisions and economic data releases to assess the longer-term impact of the US-Iran peace agreement on global markets, inflation, and monetary policy.
