The United States and Iran have reached a peace agreement to end nearly four months of conflict, prompting a significant rally in global financial markets and a sharp decline in oil prices. The deal, announced on Sunday and set for formal signing on Friday in Switzerland, includes the immediate and permanent termination of military operations on all fronts, the reopening of the Strait of Hormuz, and the removal of the U.S. naval blockade on Iranian ports [1][5][6][7]. President Donald Trump confirmed the agreement, stating, 'I hereby fully authorize the toll-free opening of the Strait of Hormuz, and, simultaneously herewith, authorize the immediate removal of the United States Naval blockade. Ships of the World, start your engines. Let the oil flow!' [6].
Asian equity markets responded with strong gains: South Korea’s Kospi surged 5.1%, Japan’s Nikkei 225 climbed 3.6%, and the broader Topix advanced 2.6% [1][8]. South Korea’s main stock index closed up 4.6% [1]. The positive sentiment was attributed to the anticipated easing of supply disruptions and lower geopolitical risks, with technical analysis indicating that several indexes broke through key resistance levels [1][8].
Oil markets saw the most dramatic reaction, with West Texas Intermediate (WTI) futures falling to a two-month low near $79.40–$80.83 per barrel, down 4.77%, and Brent futures dropping about 4% to $83.77 per barrel [5][7][8]. The reopening of the Strait of Hormuz, a critical energy chokepoint, is expected to restore stable oil flows and reduce transport costs and risk premiums on energy commodities [1][5][7][8]. However, analysts cautioned that the outlook for oil prices depends on how quickly shipping and production can normalize, with potential risks from damaged infrastructure and sea mines [8].
The peace deal also reverberated across currency and precious metals markets. The U.S. dollar index weakened by 0.32% to 99.483, while the yield on the 10-year Treasury note fell 5 basis points to 4.423%, reflecting reduced inflation concerns [8]. The British Pound (GBP/USD) and Euro (EUR/USD) both appreciated as risk aversion eased and the U.S. dollar declined [3][4]. Gold prices rose to a weekly high, up almost 2% to $4,302.19 per ounce, as some investors remained cautious about the deal’s implementation and continued to seek safe havens [2][8]. Technical analysis indicated that gold remains capped below key resistance levels, with subdued upside momentum [2].
World leaders, including those from the U.K., France, Germany, Italy, and Japan, welcomed the agreement and called for its rapid and comprehensive implementation, emphasizing the need for the Strait of Hormuz to remain fully and permanently open [7]. Some European nations signaled readiness to lift sanctions on Tehran if Iran takes steps to curb its nuclear program, which will be addressed in 60 days of additional talks following the signing [6][7]. Iranian officials confirmed the ceasefire and outlined U.S. commitments to lift the naval blockade, end the state of war, and release frozen Iranian funds [2][3][4][6].
Despite the optimism, several analysts and market participants cautioned that the deal is not yet signed and that implementation risks remain. 'The deal isn't actually signed until June 19th, the details are still thin, and this conflict has shown more than once that headlines can turn on a dime,' warned Josh Gilbert of eToro [8].
CONCLUSION
The U.S.-Iran peace agreement has triggered a strong rally in global equities and a sharp drop in oil prices, as markets anticipate reduced geopolitical risk and the reopening of the Strait of Hormuz. While world leaders and investors are optimistic, lingering uncertainties about the deal’s finalization and implementation continue to support safe-haven assets like gold. The market’s next focus will be on the formal signing and subsequent negotiations, which will determine the durability of this relief rally.