The agreement between the United States and Iran to reopen the Strait of Hormuz eased concerns over potential disruptions in energy supplies, which had previously unsettled markets. Boosted by the news, stock markets and government bond prices rose, while oil prices fell to their lowest level in three months.
Asian stock indices rose 2.8% in early trading, while S&P 500 futures gained 1%. The dollar weakened against major currencies, and bitcoin surged more than 2%. Brent crude oil prices fell over 4%, dropping below $84 per barrel.
The peace agreement paves the way to end a conflict that has killed thousands since late February, disrupted the global economy, and triggered sharp fluctuations in financial markets. The restoration of Middle East oil supplies could help eliminate the geopolitical premium embedded in crude prices, thereby easing pressure on policymakers to address inflation.
President Trump posted on Truth Social that the Strait of Hormuz would be “open” on Friday following an agreement with Iran. The deal was initially announced by Pakistani Prime Minister Shehbaz Sharif, later echoed by Trump and Iranian state media. Neither side has released the text of the agreement, but its general terms have circulated for several days.
A lasting peace agreement could help ease inflationary pressures and strengthen expectations of lower interest rates, thereby supporting the bond market, while also benefiting equities and commodity markets.
The dollar is expected to weaken this week, along with crude oil prices, following Friday’s announcement by the U.S. and Iran of plans to sign a peace agreement. Continued decline in oil prices will reinforce expectations that inflation may peak again. As war-related trading ends, this will boost both stock and bond markets.
The biggest question is how quickly the relief from falling oil prices will translate into lower inflation, and whether this will open the door for central banks to adopt looser monetary policies.
Elias Haddad, global market strategist at Brown Brothers Harriman, wrote in a client report: “The Fed’s hawkish decision to keep rates unchanged should support the dollar, but Wash could disrupt the dollar’s bull run.” Markets will be watching whether Wash joins the majority in maintaining rates or opposes rate cuts, becoming the first Fed chair in history to lose a policy vote.
Technical Analysis:
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Gold: With the Iran nuclear deal confirmed by three parties, gold opened higher on Monday and continued to rise, reclaiming the 4,300 level. We expect prices to further rebound and strengthen during the day. Traders should primarily focus on capturing bullish signals from momentum breakouts. For detailed positioning, please consult the plugin.
(Gold 15-minute chart)
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Nasdaq: After the price tested the green zone twice last Friday, it began a strong upward move, offering a risk-reward ratio of over 8 times. Given the current improvement in market sentiment, we recommend maintaining both momentum breakout strategies and monitoring rebound signals following near-term liquidity sweeps. For detailed positions, please consult the plugin.
(NASDAQ 15-minute chart)
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Crude oil: Prices have dropped from near 90 to around 80, a decline of over 10%. The confirmation of the U.S.-Iran deal has left the market without hope for an oil price rally. However, the short-term drop has been too steep; we prefer to wait and observe whether there is a rebound that fills the gap before identifying potential bearish signals. For detailed positions, please consult the plugin.
(Crude Oil 15-minute Chart)
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Today’s key financial data and events to watch:
20:30 U.S. June New York Fed Manufacturing Index
21:15 U.S. Industrial Production YoY for May
22:00 U.S. June NAHB Housing Market Index
