Global equity markets rallied on Monday after the United States and Iran agreed a tentative peace deal, easing concerns over energy supplies and triggering a sharp fall in oil prices.
European markets were set for a strong open, with Germany’s DAX rising 1.6% in pre-market trading and London’s FTSE 100 indicating gains of around 0.8%.
Investor sentiment was boosted after US President Donald Trump announced that the agreement would include the reopening of the strategically important Strait of Hormuz, a key shipping route for global oil exports.
Posting on Truth Social, Trump declared: “Ships of the World, start your engines. Let the oil flow!”, signalling expectations of a significant improvement in energy supply conditions.
Confirmation of the agreement came after Pakistan’s Prime Minister Shehbaz Sharif stated that a peace deal between Washington and Tehran had been reached, although full details of the arrangement have yet to be released.
The prospect of reduced geopolitical risk and increased oil flows sent Brent crude down 4.7% to around $83 per barrel, extending a dramatic retreat from the conflict-driven peak of $126 reached in May.
Lower energy prices were welcomed by investors and policymakers alike, particularly as central banks prepare for a busy week of policy meetings. The decline in oil prices is expected to ease inflationary pressures and potentially reduce the need for further interest rate increases.
Asian markets responded enthusiastically to the news. Japan’s Nikkei 225 surged 5%, benefiting from the country’s status as a major energy importer, while South Korea’s Kospi climbed 5% as investors embraced the improved global outlook.
China’s CSI 300 rose 1.9%, while Hong Kong’s Hang Seng gained 0.5%, contributing to a broad-based rally across the region.
With oil prices falling, inflation concerns easing and geopolitical tensions appearing to subside, investors have started the week with renewed confidence, driving strong gains across global equity markets and reinforcing expectations for a more supportive economic environment in the months ahead.
