U.S. stock futures climbed on Monday following announcements that the United States and Iran have reached an interim peace agreement, a development that market participants interpreted as easing a major geopolitical risk that has weighed on global trade and energy flows for more than three months.
By 03:03 ET (07:03 GMT), futures pointed higher across major index contracts: the Dow futures rose by 492 points, or 1.0%, S&P 500 futures gained 89 points, or 1.2%, and Nasdaq 100 futures increased by 590 points, or 1.9%.
Analysts at Deutsche Bank captured the mood in markets, noting that, after 107 days and numerous false starts, there was renewed confidence that a deal could end the conflict and reopen the Strait of Hormuz. That sense of relief helped lift sentiment following gains at the end of the prior trading week, when hopes of an imminent agreement and a strong debut for SpaceX drove broader advances.
SpaceX's initial public market performance drew particular attention. Shares jumped above their IPO price of $135, valuing the company at more than $2 trillion and placing it among the largest listed U.S. firms. The flotation also buoyed other space-sector stocks, with Rocket Lab and Planet Labs rallying in the wake of the listing even as some analysts raised questions about fundamentals.
Deal mechanics and immediate uncertainties
Both Washington and Tehran announced that an interim peace deal has been reached and that a signing is planned in Switzerland on Friday. The parties so far have not released a comprehensive list of terms, and media reports indicate the agreement may include a 60-day pause intended to allow negotiations over Iran's nuclear program to proceed.
President Donald Trump has told the Wall Street Journal that the deal includes an Iranian commitment not to obtain nuclear weapons. However, he did not repeat that assertion in social media posts on Sunday. Pakistan's prime minister, Shehbaz Sharif - who acted as a mediator during the conflict - said the two countries have "declared the immediate and permanent termination of military operations on all fronts," explicitly including Lebanon.
Questions remained about the outlook for the agreement after U.S.-allied Israel conducted strikes on Iran-backed Hezbollah militia positions in Lebanon, an action that drew a stern rebuke of Israeli Prime Minister Benjamin Netanyahu from President Trump. Those events underlined that while leaders have signaled an end to active hostilities, the regional environment still contains elements of friction.
Energy market reaction - oil slides as Hormuz reopening looms
President Trump said in a social media post that the Strait of Hormuz would be reopened on Friday, although he noted that mine-clearing operations in the narrow waterway off Iran's southern coast would need to be completed first. That prospect - of flows through the strait resuming - had an immediate dampening effect on oil prices, which had been elevated since the outbreak of hostilities.
By 08:28 ET, Brent crude futures, the global benchmark, had fallen 5.1% to $82.84 a barrel. U.S. West Texas Intermediate crude futures declined 5.8% to $79.93 a barrel. In addition to reopening the strait, Trump suggested that a long-standing U.S. naval blockade of Iranian ports would be lifted when Iran's restrictions on the waterway are removed - a move that could allow a resumption of shipping through a critical conduit that previously carried roughly a fifth of the world's oil and liquefied natural gas before late February's outbreak of war.
Despite the initial price slide, some analysts cautioned that oil is unlikely to revert to prior levels immediately. They pointed to ongoing geopolitical risk premiums embedded in energy markets and to the operational realities of restoring disrupted supply chains. Analysts at ING emphasized that while financial markets were excited by a possible Middle East peace deal and the prospect of renewed flows out of the Gulf, it remained doubtful that such developments would translate into substantially lower energy prices in the near term.
Precious metals and the dollar
Gold extended its recent run of gains as risk sentiment improved and the U.S. dollar softened. Spot gold rose 2.3% to $4,315.44 an ounce, marking the highest level since June 9 and extending a three-session advance. Gold futures also climbed 2.3% to $4,336.17 an ounce.
Part of bullion's strength was linked to a weakening U.S. dollar, which fell to a 10-day low against its major peers. The greenback has served as a relative safe-haven during the conflict, and a pickup in risk appetite following the peace announcement left the dollar vulnerable. A softer dollar tends to make gold less expensive for overseas buyers and can support demand.
Lower oil prices may also have supported gold by easing concerns about a sustained energy-driven inflation spike that could push central banks toward more hawkish policy. Gold, a non-yielding asset, typically underperforms in environments of elevated interest rates, so any reduction in inflationary pressure could bolster bullion.
Federal Reserve decision in focus
Markets are now weighing how the interim peace agreement may influence the Federal Reserve's policy decision scheduled for Wednesday. Traders have increasingly priced in the probability that the Fed will hold rates steady at the meeting and that any tightening might be delayed until later in 2026, with early-year expectations of rate cuts largely extinguished after recent data showed an uptick in inflation.
Analysts at Vital Knowledge said it remains likely that the Fed will remove the easing bias from the Federal Open Market Committee's statement. They added that new Fed Chair Kevin Warsh - operating between faster price growth and President Trump's public calls for aggressive rate cuts - could use the post-decision press conference to nudge markets in a more dovish direction by reiterating that some Fed officials have indicated rate reductions would be appropriate if the Iran conflict were resolved soon.
The intersection of geopolitics and monetary policy has therefore taken center stage for market participants. While the peace announcement has relieved one major source of uncertainty, central bank decisions and inflation dynamics continue to drive expectations for interest rates and asset valuations.
Market breadth and sector reactions
The initial market response spanned equities, energy, and precious metals. Equity futures rose broadly, reflecting improved risk sentiment linked to the prospect of reduced disruptions to maritime trade. Energy markets saw pronounced declines in crude benchmarks as the potential reopening of a strategic shipping lane suggested increased future supply. Precious metals rallied as the dollar eased and traders reassessed inflation and rate expectations.
Space-sector equities were an additional focal point after a notable public debut for one major company lifted related names. The combination of geopolitics, sector-specific news, and an upcoming central bank decision created a complex backdrop that market participants must parse in the coming days.
What remains unclear
- The full list of provisions in the interim agreement between the U.S. and Iran has not been released, and media reports indicate only a possible 60-day window for negotiating nuclear issues.
- Operational details and timelines for reopening the Strait of Hormuz depend on mine-clearing and the lifting of any blockades, steps that have been referenced but not specified.
- The extent to which the deal will sway the Federal Reserve's near-term policy stance is uncertain, even as market odds shift toward a hold at the upcoming meeting.