HONG KONG: Global equity markets mostly extended gains on Tuesday, while oil prices remained largely stable after a sharp decline triggered by optimism surrounding the recently announced US-Iran peace agreement, which is expected to reopen the strategically vital Strait of Hormuz.
Investor sentiment remained positive following Monday’s strong rally, fueled by expectations that the agreement could bring an end to more than three months of conflict that disrupted global energy supplies, heightened geopolitical tensions, and contributed to inflationary pressures worldwide.
Attention is now focused on a formal signing ceremony scheduled for Friday in Switzerland, where the agreement is expected to be officially endorsed by both sides.
US President Donald Trump stated that shipping activity had already resumed through the Strait of Hormuz and that the critical waterway would be “completely open” by Friday. Iranian media also reported that several oil tankers and cargo vessels had successfully transited the strait, signaling a gradual return to normal maritime operations.
The Strait of Hormuz, through which nearly one-fifth of global oil trade passes, was effectively closed after Iran imposed restrictions following the outbreak of hostilities with the United States and Israel earlier this year. The United States subsequently tightened restrictions on shipping linked to Iranian ports.
According to a senior US administration official, President Trump, Vice President JD Vance, and Iranian parliamentary speaker Mohammad Bagher Ghalibaf have already electronically signed the agreement, paving the way for its formal ratification.
Market analysts said investors are increasingly optimistic about an improvement in the geopolitical landscape, although risks remain if negotiations encounter setbacks or implementation challenges.
“The key issue now is not whether a deal will be finalized, but how quickly energy production and exports can return to normal levels,” analysts noted, adding that markets will closely monitor compliance with the agreement and the pace of supply recovery.
Despite the positive sentiment, energy market experts caution that oil supply conditions may remain tight in the near term. Recent data from the US Department of Energy showed that strategic petroleum reserves have fallen to their lowest level since 1983, underscoring ongoing vulnerabilities in global energy markets.
Shipping companies have also urged caution, warning that a full resumption of commercial traffic will depend on sustained security guarantees in the region.
The peace agreement sparked a strong rally across global markets on Monday, with major US indices posting gains and the Dow Jones Industrial Average reaching a record high. Crude oil prices simultaneously fell by nearly five percent as concerns over supply disruptions eased.
On Tuesday, Asian markets continued to reflect cautious optimism. Seoul led regional gains for a second consecutive day, rising more than one percent after surging over five percent in the previous session. Technology stocks remained a key driver of the rally.
Investor enthusiasm was further supported by another strong performance from SpaceX, whose shares jumped nearly 20 percent for a second day following its market debut.
Markets in Shanghai, Singapore, Taipei, Wellington, and Manila also closed higher, while Tokyo, Hong Kong, and Sydney recorded modest declines.
Meanwhile, investors paid little attention to data showing Chinese retail sales contracted in May for the first time since 2022, as focus remained firmly on geopolitical developments and global energy markets.
Market participants are also closely watching the policy meeting of the Bank of Japan, where policymakers are widely expected to raise interest rates to their highest level in more than three decades.
Overall, improving prospects for regional stability and the anticipated reopening of the Strait of Hormuz continue to support investor confidence, although markets remain alert to any developments that could affect the implementation of the landmark US-Iran agreement.
Story By AFP
