U.S. stock futures climbed on Monday, while oil prices and the dollar dropped. Reports of a possible peace deal in the Iran war made investors more optimistic.
The conflict, now almost three months old, has disrupted global energy supplies, pushed prices higher, and changed expectations for interest rates amid inflation concerns.
Tehran’s closure of the Strait of Hormuz, a crucial route for about one-fifth of the world’s oil and liquefied natural gas, remains the main uncertainty weighing on market confidence.
President Donald Trump lowered expectations on Sunday, saying his administration would not hurry into an agreement with Iran. This cautious approach followed earlier comments that Washington and Tehran had “largely negotiated” a memorandum of understanding to reopen the strait.
Oil prices dropped to their lowest levels in two weeks. Brent crude futures fell more than 4% to $98.83 a barrel, and U.S. West Texas Intermediate dropped to $92.03 a barrel. The dollar also weakened as investors became more willing to take risks, pushing the euro up 0.37% to $1.1646 and strengthening the yen.
Stock markets responded well, with Nasdaq futures up 0.89% and S&P futures rising 0.6%. However, analysts warned that lasting gains will depend on real progress in reopening the strait. “We will need to see an agreement in place in the coming sessions as there are still major sticking points,” said Nick Twidale, chief market analyst at ATFX Global.
Looking ahead, Japan’s Nikkei was expected to open strong. Strategists at Commonwealth Bank of Australia pointed out that the timing and terms for reopening Hormuz, along with infrastructure repairs, are still the most important issues for the market.
