U.S. stock futures pointed to a strong start for trading on Monday, with investors expected to build on the gains recorded during the previous two sessions following news that Washington and Tehran have agreed to end a conflict that has lasted for more than three months.
The positive sentiment comes as markets assess the potential economic impact of the emerging agreement and its implications for energy prices and inflation.
Trump Announces Breakthrough Deal
President Donald Trump said on Truth Social that an agreement with Iran is “now complete” and announced the “toll free opening” of the Strait or Hormuz along with the immediate removal of the U.S. blockade on Iranian ports.
Trump later clarified that the Strait of Hormuz would reopen once the agreement is formally signed on Friday, allowing mine-clearing operations to be completed first.
Reports indicate that the arrangement extends the ceasefire between the United States and Iran for 60 days, providing a framework for negotiations over Tehran’s nuclear enrichment programme and the handling of its stockpile of highly enriched uranium.
Oil Prices Slide as Inflation Concerns Ease
Crude oil futures in the United States fell by more than 5% following the announcement, helping to alleviate concerns that higher energy costs could continue to fuel inflation.
“Prior to the deal, investors had become increasingly concerned that higher energy costs would feed into broader inflation pressures and potentially force policymakers into additional tightening,” said Daniela Hathorn, Senior Market Analyst at Capital.com.
“The sharp decline in oil prices does not eliminate inflation risks altogether, but it does reduce some of the urgency surrounding them,” she added. “That is particularly relevant this week as the Federal Reserve meets for the first time under new Chair Kevin Warsh.”
Markets Build on Recent Strength
The latest optimism follows a strong finish to last week.
After advancing on Thursday, U.S. equities extended their gains on Friday, with the major indices spending most of the session in positive territory despite some early volatility.
The Dow Jones Industrial Average rose 353.51 points, or 0.7%, to 51,202.26, while the S&P 500 gained 37.16 points, or 0.5%, to close at 7,431.46. The Nasdaq added 79.18 points, or 0.3%, ending the session at 25,888.84.
All three benchmarks posted weekly gains of 0.7%.
Mixed Signals Around the Peace Process
Investor sentiment has been supported by hopes that tensions in the Middle East are beginning to ease, although some uncertainty remains regarding the final details of the agreement.
Trump halted a previously planned military strike against Iran last week and suggested that a peace accord was close, helping to trigger the rally in equities.
However, in a Truth Social post on Monday, Trump claimed that details of the agreement published by Iranian sources had “NOTHING to do with the terms that were agreed to, in writing.”
He also described the Iranians as “very dishonorable people to deal with,” adding, “With them, there is no such thing as dealing in good faith.”
According to media reports, the memorandum of understanding would reopen the Strait of Hormuz without tolls and provide sanctions relief for Iran based on compliance with agreed conditions.
The reported framework would also maintain the ceasefire for 60 days, including in Lebanon, while nuclear negotiations continue.
Bloomberg reported that the agreement could be signed on the sidelines of next week’s Group of Seven summit.
Additional support for markets came after Pakistani Prime Minister Shehbaz Sharif stated on X that a “final, agreed upon text of the peace deal has been reached.”
SpaceX Remains in Focus
Investors also continued to monitor SpaceX (NASDAQ:SPCX), which completed the largest initial public offering in history on Friday.
The aerospace company surged 19.3% during its Nasdaq debut, drawing significant investor attention and helping to support broader market enthusiasm for growth stocks.
Gold, Airlines and Technology Stocks Advance
Gold-related shares posted strong gains as the price of the precious metal moved higher, pushing the NYSE Arca Gold Bugs Index up 3.1%.
A sharp decline in oil prices also boosted airline stocks, with the NYSE Arca Airline Index climbing 2.8%.
Financial, semiconductor and computer hardware companies also traded higher, while biotechnology and utility stocks lagged behind the broader market.