Global Markets Rally on US-Iran Deal Hopes

Global stock markets rallied on Monday following a tentative deal between the US and Iran to end their conflict, which has disrupted energy supplies through the Strait of Hormuz. According to multiple reports, the S&P 500 rose by 1.7%, bringing it close to its all-time high, while the tech-focused Nasdaq Composite jumped by 3.1%. The blue-chip Dow Jones Industrial Average climbed by 0.9%, closing at a record high.

The market surge was driven by hopes that the deal would stabilize global energy markets and reduce inflationary pressures. Brent crude futures fell nearly 5% to just above $83 a barrel, the lowest price since the start of the conflict. Asian stock markets also continued their rally, with Japan's Nikkei 225 briefly hitting a record high before easing slightly.

The deal has raised hopes for a return to stability in global energy markets, although it is expected to take months for energy flows to fully return to normal due to the backlog of vessels around the Strait of Hormuz. According to Al Jazeera, about 500 ships are still waiting to pass through the strait, which normally carries about one-fifth of global supplies of oil and liquefied natural gas.

The rally was also fueled by strong performances in the tech sector, with SpaceX seeing a significant gain following its record-breaking market debut. Analysts suggest that the end of the conflict has tilted investors' risk appetite towards buying into the market. However, negotiations on issues such as Iran's nuclear program are expected to continue over the next 60 days, leaving room for potential hiccups that could derail the agreement.

On Tuesday, U.S. stock index futures were subdued as investors shifted focus to the Federal Reserve's interest rate decision under new Chairman Kevin Warsh. SpaceX extended its post-IPO run for a third day, with shares climbing 10%, putting it on course to overtake Amazon in market value and become the world's fifth-largest company. Memory chip stocks also jumped, with Micron Technology, Western Digital, and Seagate Technology rising between 2.9% and 4.8%.

The Fed is widely expected to hold interest rates at the 3.50-3.75% range at the end of its policy meeting on Wednesday, with investors closely watching Warsh's comments on inflation, unemployment, and the economic outlook. Inflation remains more than a percentage point above the Fed's 2% target, and Warsh's characterization about when it is likely to fall will be key in shaping monetary policy.