With signals emerging that the United States and Iran may reach an agreement to reopen the Strait of Hormuz, oil prices faced downward pressure and market risk appetite recovered, leading to widespread gains in emerging market stocks and currencies on Monday. The MSCI Emerging Markets Index rose 1.5%, marking its third consecutive trading day of gains and bringing its year-to-date increase to nearly 22%. Concurrently, an index tracking emerging market currencies advanced approximately 0.3%. U.S. stock cash markets were closed on Monday for the Memorial Day holiday. Officials from both the U.S. and Iran indicated that the two countries are nearing an interim agreement. U.S. President Donald Trump stated on Monday that negotiations are "progressing well." He also urged Saudi Arabia, Qatar, and other nations to join the Abraham Accords, further strengthening market expectations that a deal is imminent. However, negotiations on certain issues are ongoing. Marco Oviedo, a senior strategist at XP Investimentos, noted: "Against a backdrop of falling oil prices and thin liquidity due to the U.S. holiday, emerging market currencies are rising on the potential positive from a U.S.-Iran deal. But the situation remains fluid, and talks could be delayed or ultimately break down." In the foreign exchange market, most developing-nation currencies strengthened against the U.S. dollar, with the South African rand standing out, gaining over 1%. The rand, due to its high liquidity, has long been a key barometer for risk sentiment and also benefited from Brent crude oil falling below $100 per barrel. The Hungarian forint—the most oil-price-sensitive currency in Eastern Europe—rose sharply despite local market closures. The Indian rupee climbed to its highest level in two weeks following comments from central bank officials suggesting it may be undervalued. Nevertheless, some caution persists in the market. Strategists including Saktiandi Supaat at Maybank wrote in a report that any substantial rally across asset classes still requires the actual reopening of the Strait of Hormuz as a precondition, noting that "there have been multiple false dawns before." Naomi Fink, Chief Global Strategist at Amova Asset Management, stated in an interview that investors want to see clear steps taken by both the U.S. and Iran to de-escalate tensions. "If such progress is indeed seen, equities could continue to deliver returns. Equity investors appear to have surprisingly downplayed this conflict, shifting focus instead to the ongoing investment boom."