Global markets experienced a broad rebound on Monday following a reported agreement between the US and Iran to end the conflict and reopen the Strait of Hormuz. This development lifted stocks and bonds while sending crude oil prices to a three-month low, though uncertainty over the pace of supply restoration is expected to keep prices above pre-war levels.

As of the latest update, Dow Jones futures were up 0.93%, S&P 500 futures gained 1.30%, and Nasdaq futures surged 2.16%.

European equities rose 0.6%, reaching new record highs from before the conflict. Germany's DAX index climbed 1.7%, the UK's FTSE 100 increased 0.7%, and France's CAC 40 advanced 1.6%.

Energy-importing nations saw significant gains as oil prices retreated: Japan's Nikkei index jumped approximately 5%; South Korean stocks rose 5.2%; China's blue-chip index increased 1.4%; and the MSCI Asia Pacific ex-Japan index gained 2.4%.

In individual stock movements, SpaceX is poised to extend its gains after a strong debut. Nvidia shares were up 2.1% in pre-market trading, leading the so-called "Magnificent Seven" US tech stocks. Gold mining stocks advanced, while energy shares faced downward pressure.

Key Details on the US-Iran Agreement

The reported peace deal, which could end a three-month conflict that claimed thousands of lives and disrupted financial markets, is expected to allow energy supplies to recover. This would reduce the geopolitical risk premium in crude prices and ease inflationary pressures for policymakers globally.

A senior investment manager at Pictet Asset Management noted that risk appetite is returning, but a key question remains whether the Strait of Hormuz will fully reopen. A strategist at Saxo Bank described the agreement as one of the market's "strongest supporting factors," though he questioned whether sentiment could drive prices even higher.

Oil Price Outlook and Market Reactions

Brent crude fell below $83 a barrel. Gold and Bitcoin moved higher in tandem, while the US dollar weakened against major currencies. European bonds outperformed their global peers.

Analysts suggest Brent oil could retreat to $80 by year-end, provided the strait remains open. They also noted that prices in the $80–$85 range would significantly ease pressure on central banks. However, it was pointed out that shipping through the strait will not immediately normalize, with the pace of recovery and the deal's sustainability remaining uncertain.

Interest Rate Expectations and Bond Market

Investors are betting that the strait's reopening will alleviate inflation and strengthen expectations for interest rate cuts. The interest rate swaps market indicated about a 70% probability of a 25-basis-point Fed rate cut by December, down from 80% on Friday.

The yield on the 10-year US Treasury note fell nearly 5 basis points to 4.439%, touching a one-month low of 4.420% intraday. The UK's 10-year gilt yield dropped to 4.778%, its lowest since April.

The US dollar index declined 0.3% to 99.496. The euro rose to 1.1617, the pound strengthened to 1.3446, and the yen hovered near 160. Bitcoin gained 2.8% to $65,775.

Central Banks in Focus

Beyond geopolitics, the main event this week is the US Federal Reserve's interest rate decision on Wednesday, which will be the first meeting chaired by the new Chair. Central banks globally are holding meetings this week, with Japan seen as the most likely to raise rates.

Markets are focused on three points: whether policy will remain accommodative, any shift toward a more hawkish inflation stance, and changes in economic forecast language. A strategist at Nuveen highlighted the key question of whether inflationary pressures are temporary or structural. An analyst at Saxo Bank suggested the new Fed's communication would be more cautious, noting markets have already scaled back rate hike expectations.

Gold futures rose 2.2% to $4,329.80 an ounce. An analyst at XTB stated the peace deal is pushing oil prices lower, thereby easing inflation concerns and leading markets to reassess the path for interest rates.

Notable Stock Movements

SpaceX shares were up 5% in pre-market trading. The company completed its Nasdaq listing on Friday, surging 19% above its $135 per share IPO price.

The international oil price slump of 5%, nearing $80 a barrel, weighed heavily on the energy sector. Apache and Devon Energy fell over 3.5%; Marathon Oil and EOG Resources dropped 3%; Chevron and Exxon Mobil declined more than 2.5%.

Lower fuel costs benefited airlines and cruise operators, which traded higher pre-market. United Airlines gained over 5% and Delta Air Lines rose 4%; Norwegian Cruise Line and Carnival Corp jumped 4.5%, while Royal Caribbean increased 4%.

Paramount Global shares rose nearly 5% after the US Department of Justice approved its acquisition of Warner Bros. Discovery on Friday, though the deal may still face state-level regulatory scrutiny.

Fox Corporation announced an acquisition of Roku at $160 per share, an 11% premium to its Friday close. Fox's stock fell 12% on the news, while Roku's shares rose 2%. Fox stated the cash-and-stock deal aims to create an industry leader in sports, news, and streaming.

The broader market recovery and an analyst price target hike boosted tech shares. Micron Technology surged over 7.5% after an analyst raised its price target to $1,500, citing long-term structural demand for memory chips in AI industry expansion rather than a short-term cyclical trend.

Investment bank KeyBanc upgraded ratings for Firefly Aerospace and Rocket Lab to "Overweight." Both stocks moved higher on Monday, with Firefly up 5% and Rocket Lab gaining nearly 4% in pre-market trading, recovering from sharp declines on Friday attributed to fund flows into SpaceX's IPO.

A more than 2.5% rise in gold prices lifted shares of Freeport-McMoRan by 4%. The implementation of the US-Iran peace deal eased market concerns that conflict-driven inflation would force the Fed to hike rates in the coming months, prompting a flow of funds back into gold as a safe-haven asset.