The atmosphere of cautious optimism that the United States and Iran will soon reach a memorandum of understanding to extend the ceasefire was immediately and directly reflected on the map of global markets, as the energy and stock markets witnessed a contradictory bilateral interaction represented by the rapid dissipation of the oil "fear premium", in exchange for a record recovery of risk appetite in the stock markets, which led Asian stock exchanges to unprecedented historical levels.
Oil falls to lowest levels
Oil prices recorded a sharp decline at the beginning of weekly trading, with futures heading towards their lowest closing level in more than a month, specifically since the beginning of May.
Global benchmark Brent crude futures fell more than 4.5% to settle at $98.83 per barrel, after falling 6.2% in early trading to $97.10.
U.S. West Texas Intermediate crude fell 4.73% to settle at $92.03 a barrel.
Experts attribute this rapid decline to traders' conviction that the worst-case scenario of an all-out regional conflict that permanently disrupts oil supplies is beginning to fade.
The decline was not limited to crude oil, but also extended to the European benchmark natural gas markets, which recorded a parallel decline of 6.3%.
Tokyo Stock Exchange Leads Global Stocks to Historic Peaks
On the other hand, global stock markets received news of the geopolitical calm with record highs, as the US dollar fell as a safe haven to open the way for foreign currencies such as the euro and the yen to rise, which pushed global indices to flight.
Japan's Nikkei jumped 3% above 65,000 points for the first time in its history to close at 65,158.19 points, driven by the more sensitive AI and semiconductor sectors, followed by the MSCI Asia-Pacific Index up 1%.
Momentum also extended to US futures, with Nasdaq futures up 1.2% and S&P 500 up 0.7%, despite the general weakness resulting from the official holiday closures of the US, UK and Hong Kong.
The Strait of Hormuz Equation and the Markets
This structural shift in markets is inextricably linked to the fate of the Strait of Hormuz, the lifeline through which in peacetime about one-fifth of the world's liquefied oil and gas supplies passed.
Global markets, particularly Asia's major energy importers such as China, Japan, and South Korea, are looking forward to the full opening of the strait, which is currently undergoing very limited production compared to pre-war levels.
The proposed memorandum of understanding refers to a tentative agreement to extend the ceasefire for a period of 60 days, including the commencement of the clearance of sea mines to reopen the strait, but a state of uncertainty remains;
US President Donald Trump confirmed that the US blockade will continue until the final agreement is completed, refusing to rush, while Tehran has hinted through its media that the draft could collapse due to the US obstruction of the file on the release of frozen Iranian assets.
Inflationary pressures and interest rate fluctuations
The ongoing turmoil in the energy sector over the past three months has prompted financial markets to reformulate their global interest rate forecasts;
Inflationary fears caused by soaring fuel prices and the highest level in U.S. gasoline since 2022 have led to a decline in U.S. consumer confidence to its lowest level in May.
As a result, investors' bets have been turned upside down, as markets are fully pricing in the US Federal Reserve's 25 basis point rate hike, a sharp and abrupt shift from the forecast before the outbreak of the confrontations, which pointed to two consecutive rate cuts, making the peace deal an urgent economic and political interest for the Trump administration to cut energy costs and give the Fed room to catch its breath.