Global stock markets reached record highs, and US stock futures climbed, even as crude oil prices dropped. This movement followed indications that the US was close to finalizing an agreement with Iran to reopen the Strait of Hormuz and restore oil flows. Futures contracts for the S&P 500 increased by 1%, and Nasdaq 100 futures were up 1.4%. The US cash markets were closed on Monday for the Memorial Day holiday, while the dollar weakened against all its Group-of-10 counterparts.
This optimistic market sentiment builds on earlier developments, including the S&P 500 topping 7600 due to an AI-driven nine-day winning streak in early June. Equity index futures and US stock contracts had also pointed to gains following President Donald Trump's statements about a nearing US-Iran deal, which increased hopes for a diplomatic resolution to the conflict that had unsettled global markets. SpaceX, for instance, made history with a record-breaking $75 billion IPO around this time, further boosting technology shares, with the Philadelphia Semiconductor Index surging nearly 8%.
The drop in oil prices is directly linked to the anticipated increase in supply from the reopening of the Strait of Hormuz. OPEC+ had already agreed to boost output by 188,000 barrels per day beginning in August, marking its third consecutive monthly increase. This decision, along with a US-brokered memorandum of understanding between Washington and Tehran, helped calm oil markets and reinforced expectations of normalizing supplies. Brent crude had fallen to around $72 per barrel, significantly down from highs above $120 during the conflict and near pre-conflict levels seen before the US and Israel launched strikes against Iran in late February. However, some analysts caution that the market might be "overenthusiastic" about the speed of supply stabilization, as much of the initial increase in tanker traffic from the Strait of Hormuz has consisted of previously stranded vessels, not necessarily new supply.
