Global equities largely held their ground Tuesday and crude oil prices stabilized, preserving the euphoric gains triggered by a landmark peace agreement between the United States and Iran. The deal promises to reopen the Strait of Hormuz, a critical artery for global energy supplies that has been choked by more than three months of conflict.
Investor attention is now fixed on Friday’s formal signing ceremony in Switzerland, which will officially end a war that has convulsed energy markets and driven worldwide inflation to punishing levels. The anticipation of normalized shipping traffic is already reshaping market sentiment.
Strait Set to Reopen as Electronic Signatures Finalize Pact
President Donald Trump declared that maritime traffic was resuming through the strait and would be “completely open” by the end of the week. Iranian state media reported that three oil tankers and two cargo ships had already navigated the waterway, which had been under a stringent US naval blockade.
Tehran originally blockaded the strait after the US and Israel launched military operations on February 28. Washington retaliated by halting all shipping to and from Iranian ports. A senior administration official confirmed that the foundational text of the agreement has already been signed electronically by Trump, Vice President JD Vance, and Iran’s parliamentary speaker, Mohammad Bagher Ghalibaf.
Analysts Eye Supply Normalization Pace
“Investors are increasingly pricing in a lasting improvement in the geopolitical backdrop,” noted Fiona Cincotta, senior market analyst at City Index. “However, with several details yet to be finalised, any setbacks could trigger a sharp market reaction. For now, confidence is growing that the Strait of Hormuz will reopen and energy supplies will normalise.”
Cincotta emphasized that the market’s key concern is shifting from whether a deal is reached to how quickly oil exports and production can recover. “Investors will also be watching compliance with the agreement and the pace of supply normalisation,” she added.
Industry observers warn that oil markets will likely remain tight for weeks or months. Fresh data from the US Department of Energy revealed that strategic petroleum stockpiles plunged last week to their lowest level since 1983. Shipping groups cautioned on Monday that it remains too early to safely resume full commercial sailing operations.
Regional Markets Ride Wave of Optimism
The initial peace announcement unleashed a powerful relief rally, propelling the Dow Jones Industrial Average to a record high while crude prices tumbled nearly five percent. That optimism remained largely intact on Tuesday, with both major oil benchmarks barely moved and most stock indices in positive territory.
South Korea’s Kospi led regional gains for a second day, surging more than one percent after piling on over five percent in the previous session. The advance was underpinned by fresh strength in the technology sector, which also benefited from another explosive day for Elon Musk’s SpaceX. The space exploration giant jumped almost 20 percent for the second consecutive day following its blockbuster market debut.
Markets in Shanghai, Singapore, Taipei, Wellington, and Manila also advanced. Tokyo, Hong Kong, and Sydney bucked the trend to close lower. Investors showed little reaction to data indicating Chinese retail sales shrank last month for the first time since 2022, focusing instead on the Bank of Japan’s policy meeting, where it is widely expected to hike interest rates to a 31-year high.
