Global financial markets experienced a significant reversal on Monday. US President Trump announced that the US and Iran have reached an agreement to end the war, with the formal signing ceremony scheduled for this Friday in Switzerland. Senior government officials revealed that both sides signed a memorandum of understanding electronically on Sunday, igniting market risk appetite. US stocks surged across the board, with the Dow Jones Industrial Average hitting a fresh record high intraday and the Nasdaq Composite soaring 3%. International oil prices plummeted nearly 6%, with WTI crude briefly breaking below the $80 mark. The US dollar weakened broadly, gold surged over 3%, and Bitcoin broke through $67,000. Market focus now shifts to this week's intensive central bank decisions, particularly the first policy meeting of new Fed Chair Wash.
Trump stated on social media Sunday evening that the deal was complete, including a framework for future negotiations, requiring Iran to take action on its nuclear program before gaining economic benefits. The US will end its naval blockade on Iranian ports and related channels, while Iran will reopen the Strait of Hormuz. During a meeting with French President Macron on Monday, Trump confirmed that the Strait of Hormuz would fully open by Friday, with the agreement text to be published afterward. He emphasized that sanctions would not be lifted until Iran fulfilled its obligations, expressing hope for good relations with strong supervision to ensure Iran does not possess nuclear weapons. US Vice President Vance expected the Strait to remain toll-free long-term, though Iranian media suggested the toll-free arrangement might last only 60 days, after which it would be jointly managed by Iran and Oman. Discrepancies exist regarding the details.
US stocks opened the shortened holiday trading week with strong gains on Monday, as market risk appetite significantly warmed, led by technology and growth stocks. SpaceX shares rose over 10%, continuing the strong performance from its listing debut. Market strategists noted that the stock's trading performance was more orderly than expected, resembling long-term portfolio inclusion rather than typical short-term speculative hype. The US-Iran deal alleviates energy supply shocks and reduces concerns about renewed inflation heating up. Investors believe that if oil prices continue to fall, the necessity for further Fed rate hikes will significantly decrease, becoming a key factor driving the stock market rally.
The oil market was one of the most volatile assets on Monday. As Trump authorized the reopening of the Strait of Hormuz, international oil prices plunged sharply. Trump wrote on social media to let the oil flow, but the shipping industry remains cautious. The Global Shipping Trade Organization warned that current statements from both sides regarding the agreement remain unclear, insufficient to confirm route safety and specific transit times, with mine risks in the Strait of Hormuz remaining a primary concern. The market generally believes that while crude prices fell quickly, refined product prices may take longer to reflect the impact of the crude decline.
The US dollar faced broad pressure on Monday. With the preliminary US-Iran agreement, oil prices and Treasury yields fell, risk sentiment improved, and safe-haven demand for the dollar declined. The US Dollar Index fell to a low of 99.39, while the Euro and Pound Sterling rose to stage highs against the dollar. FX strategists stated that the market is willing to believe this deal because not only does the US claim an agreement was reached, but Iran also confirmed a framework consensus. However, a macro research director warned that the market may remain cautious in further pricing the peace agreement, as nuclear details have not been fully disclosed. Only if clearer nuclear agreement arrangements emerge in the coming days might the market price optimism more aggressively.
Gold rebounded strongly on Monday, with spot gold rising over 3%, reaching its highest level since at least June 5. Superficially, the US-Iran peace deal weakens safe-haven demand, which should suppress gold, but the core logic of this rally is not traditional safe-haven seeking but rather interest rate expectation repricing. During the war, soaring oil prices pushed up inflation expectations, and the market once worried the Fed might hike rates again within the year, suppressing non-yielding asset gold. As expectations for reopening the Strait of Hormuz heated up, oil prices fell rapidly, easing concerns about runaway inflation. Traders therefore lowered Fed rate hike expectations, causing the dollar and Treasury yields to fall simultaneously, driving a sharp rebound in gold. The Chief Strategist of the Futures Market stated that the gold market is digesting and removing conflict risk. The peace deal news lowered Treasury yields, the dollar, and oil prices, which were the main cross-asset pressures gold faced previously. The market is now turning attention to this week's Fed policy meeting, which will be Wash's first chairing as Fed Chair. Gold's next move will depend on Wash's statements on the rate path, inflation pressure, and economic outlook.
The cryptocurrency market strengthened in sync, with Bitcoin briefly breaking the $67,000 high on Monday, a gain of about 4%. The US-Iran peace deal pushed a broad rebound in risk assets, driving the crypto market to shake off previous geopolitical conflict impacts. Traders believe that after holding the $60,000 level, market demand for Bitcoin shows signs of recovery. On-chain data also shows accumulation trend scores for multiple wallet groups rebounding, indicating investors are absorbing supply at low levels. However, there is divergence in the market on whether Bitcoin has formed a reliable bottom. Some traders believe the current rebound may still face low timeframe liquidity sweeps, with prices encountering short-term resistance above $67,000. Analysts pointed out that since order book liquidity remains thin, Bitcoin price fluctuations could be amplified. If risk sentiment continues to improve and the Fed releases relatively mild signals, Bitcoin is expected to test higher liquidity zones further.
