Global Stocks Rise, Oil Prices Drop as U.S.-Iran Deal Hopes Ease Inflation Fears

• Asian and European stock markets rallied as Hormuz reopening hopes lifted risk appetite.
• Oil prices fell to two-month lows as traders reacted to a reported deal framework.
• SpaceX’s planned Nasdaq debut added a major liquidity test for Wall Street.

Global stocks rose sharply on Friday as reports of a potential U.S.-Iran peace deal eased fears over inflation and energy supply risks. The rally followed Iranian state media reports that a proposed agreement would include reopening the Strait of Hormuz.

Consequently, oil prices fell as traders reacted to hopes that the three-month conflict could be moving closer to a diplomatic settlement.

Asia And Europe Stocks Rally On Reported Deal Framework

Asian markets led the early rally, with Japan’s Nikkei 225 gaining 2.8% and India’s Nifty 50 rising 1.9%. South Korea’s Kospi posted the strongest move in the region, climbing 4.6%, while the Shanghai Composite advanced more than 1%.

European shares followed the move higher in morning trade. The pan-European Stoxx 600 rose 1.8%, while most major bourses added about 2% as investors responded to lower energy-price pressure.

Similarly, Wall Street futures showed a more measured reaction. S&P 500 futures added about 0.2%, Nasdaq 100 futures moved slightly lower, and Dow Jones Industrial Average futures gained 234 points, or about 0.5%.

Crude Drops As Draft Deal Targets Hormuz Reopening

On the other hand, crude prices dropped after Trump said Washington expected an agreement to be signed “over the next few days.” He also said the Strait of Hormuz would reopen once a deal was finalized.

Per reports, U.S. crude futures for July delivery fell 1.61% to $86.30 per barrel. Brent crude futures for August delivery lost 1.75% to $88.80 per barrel, while another reading showed Brent down 2.5% at $88.15.

The draft memorandum included a U.S. commitment to lift oil sanctions. It also included a commitment from Iran to reopen the Strait of Hormuz.

However, final negotiations would reportedly not begin until half of Iran’s frozen funds were released. It also cited the suspension of oil sanctions and the lifting of a naval blockade as conditions.

Nevertheless, Tehran later disputed Trump’s comments. State-affiliated Fars reported that Iran had not approved any draft text for an initial memorandum with Washington.

Treasuries Gain As Inflation Fears Ease Before SpaceX IPO

Traders were also watching SpaceX as the rocket maker prepared to debut on Nasdaq under the ticker SPCX. The company set a fixed price of $135 per share, implying a valuation of $1.77 trillion.

The planned sale covers 555.6 million shares and would raise $75 billion. That would make it the largest initial public offering on record, surpassing Alibaba’s $22 billion offering in 2014.

The offering added another test for markets already responding to geopolitical and inflation signals. Its size raised attention as large IPOs can absorb capital and reshape short-term positioning across growth sectors.

Inflation, on the other hand, remained central to the market reaction. Treasuries held gains as traders trimmed expectations for a Federal Reserve rate hike this year.

At press time, two-year Treasury yields were steady at 4.0537%, while benchmark 10-year yields stood at 4.814%. The dollar was broadly flat after overnight losses, rising 0.2% to 160.27 yen.

On the same accord, gold slipped 0.8% to $4,181 an ounce after jumping 3.5% overnight. The move came as risk demand improved and investors reduced demand for defensive assets.

The peace reports arrived after the European Central Bank raised rates Thursday for the first time in nearly three years. Inflation also accelerated in France and Spain in May, while Britain’s economy contracted 0.1% in April.

Related: Trump Set To Sign an MoU Between the US and Iran This Weekend