Global markets that rallied on news of a preliminary U.S.-Iran memorandum cooled as investors sought more detail on the deal's terms and concrete signs that it would lead to a substantial uptick in tanker movement through the Strait of Hormuz. The focus on energy flows was matched by heavy attention on central banks, with the Bank of Japan and the Reserve Bank of Australia setting the tone as a busy week for policymakers began.
Market participants continued to watch vessel-tracking data for evidence that tankers were transiting the strait in greater numbers. Although President Donald Trump said on Monday that oil tankers were leaving the area, tracking records showed no notable tanker crossings on Monday; ships were still moving along Oman’s coast under the protection of the U.S. Navy. Brent crude extended its slide on Tuesday after falling roughly 5% on Monday, but prices remained above $80 per barrel.
Equities broadly extended earlier gains: major Asian indexes inched higher, European markets opened with positive momentum and U.S. equity futures were largely flat ahead of the cash open. The market reaction suggested investors are prepared to reward a credible easing of geopolitical risk, but are reluctant to price that outcome until the deal's specifics and tangible shipping developments arrive.
Central banks take the stage
The Bank of Japan implemented a widely anticipated quarter-point increase in its policy rate, taking the rate to 1% - a level described as a 31-year high. The move was presented as part of a broader normalization effort aimed at containing price pressures that were aggravated by energy shocks tied to the Iran conflict. BOJ Deputy Governor Shinichi Uchida publicly welcomed the U.S.-Iran memorandum but cautioned that uncertainty remained around the "pace of improvement" in oil flows.
The BOJ's decision had limited immediate influence on the yen, which stayed near 160 to the dollar. Market commentary noted that further depreciation beyond current levels could prompt another round of government intervention to support the currency, given how sensitive currency dynamics remain to central bank action and geopolitical developments.
In Canberra, the Reserve Bank of Australia left its cash rate unchanged at 4.35%, citing a slowing economy. The RBA nonetheless reiterated that inflation remained too high, leaving the door open to future rate increases should price pressures fail to abate.
Investors are now looking ahead to policy meetings later in the week by the Federal Reserve and the Bank of England, both of which are expected to keep rates steady when they convene on Wednesday and Thursday respectively. The market will parse the language in those decisions closely to determine whether a resolution to the Iran conflict could alter the central banks' communications and projected paths for rates.
Tech and credit: heavy flows and large moves
Technology-related market action provided additional momentum. SpaceX shares continued their steep ascent following a large initial public offering last Friday, rallying more than 19% on Monday. Activity around the stock in premarket trading positioned SpaceX to potentially become the world's fifth-largest company by market value, surpassing Amazon's $2.7 trillion mark. Trading activity was notable in dollar terms: more than $1.16 billion of SpaceX shares had changed hands as of early Tuesday, a volume described as several times that of Nvidia, Microsoft, Tesla and Apple combined over the same period.
On the corporate debt front, Nvidia announced a $25 billion U.S. bond offering - its first return to the debt markets since 2021. Market commentary suggested the issuance is intended to create a liquid benchmark for the company's cost of credit rather than to immediately fund capital expenditure, reflecting a trend among major technology firms to lock in financing terms amid intense investor demand in the AI sector.
Policy discussions and geopolitics
International leaders were also convening: the Group of Seven met at Evian-les-Bains to discuss a range of subjects including the conflict, global economic imbalances and the rapid rise of artificial intelligence. The G7 meeting added another diplomatic backdrop to market sentiment as policymakers weighed global risks and the economic implications of technological disruption.
A Reuters/Ipsos four-day poll, conducted both before and after the public announcement that U.S. and Iranian leaders had agreed to end the war, indicated some movement in public opinion on economic stewardship. Approximately 24% of Americans said they currently approve of President Trump's handling of the cost of living, up from 22% a week earlier and 20% a month earlier. The share who disapproved fell to 69% from 73% a month earlier. The poll noted the timing of responses relative to the announcement that had helped push gasoline prices markedly higher during the conflict.
Data and events to watch
- U.S. May housing starts and May import prices are due at 8:30 a.m. EDT.
- The U.S. 20-year Treasury bond auction is scheduled for 1 p.m. EDT.
These datapoints and the Treasury auction will be monitored for signals about domestic demand, inflation pass-through and the willingness of investors to absorb long-duration paper as central banks steer policy statements for the week.
For financial market participants, the coming days will hinge on two linked threads: whether the U.S.-Iran memorandum translates into measurable improvements in oil shipments through the Strait of Hormuz, and how central banks recalibrate their messaging in light of any such changes. Both will have consequences for commodity prices, currency stability and the rate outlook that underpins valuations across equities and credit markets.