Markets are cheering the US-Iran deal, but other deals to warn investors are yet to be signed

Asian shares rallied on Monday as oil prices fell after the US and Iran agreed on a peace deal aimed at ending nearly four months of conflict, prompting investors to release some of the country’s risk-weighted currency that has dominated markets since February.

The strongest reaction was seen in energy markets. The future of US crude oil for July delivery fell 4.77% to $80.83 a barrel at 8:27 pm ET. Brent futuresinternational average, August delivery traded about 4% lower to $83.77 per barrel.

Asian stocks rose. South Korea’s Kospi jumped 5.1%, Japan’s Nikkei 225 rose 3.6%, and the broader Topix rose 2.6%. Australia’s S&P/ASX 200 gained 1.3%.

“Markets have been waiting for this news for months, and the relief is already showing, with oil slipping and commodities risking a hold … after President Trump confirmed that the Strait of Hormuz will be reopened and the embargo on US shipping will be lifted,” said Josh Gilbert, lead APAC analyst at Toro.

The drop in oil and the prospect of peace have backfired on other asset classes. The U.S. dollar index weakened by 0.32% to 99.483, while the yield on the 10-year Treasury note fell 5 basis points to 4.423%, suggesting that investors were discounting inflation concerns over lower energy prices.

“The most immediate impact is the repricing of the inflation risk premium that markets have been carrying since the closure of the Straits,” said Billy Leung, investment strategist at Global X ETFs.

“Oil is a very sharp mover, but the most telling signal is actually in bonds, where yields falling alongside rising equities confirm that the market was treating the energy shock as transitory rather than structural.”

Outside of reserves, gold rose again. “The gold is the attraction here,” Leung said. “On a pure risk trade, gold should be sold as the geopolitical premium eases, but it is holding a bid around $4,300, which tells you that the market is not yet fully confident in the deal.”

Spot gold prices were up about 2% at $4,302.19 an ounce.

That skepticism reflects continued uncertainty about the accord, which remains unsigned and subject to implementation risks.

Gilbert warned that “the agreement has not been signed until June 19, the details are still small, and this conflict has shown more than once that the headlines can turn on a dime.”

Analysts at the Commonwealth Bank of Australia reiterated that the outlook for oil depends on how quickly exports and production can adjust.

Vivek Dhar, head of commodities and sustainability research at CBA, expects Brent to fall to around $80 a barrel by the end of the year, assuming the Strait remains open and exports recover. However, he warned that damage to refining infrastructure, the presence of sea mines and uncertainty about the movement of tankers could delay the return to normal operations.

However, he said markets may take solace in the hope that oil flows need to be restored to around 60%-70% of pre-war levels to restore global supply expectations.

For investors, the biggest possibility is what cheap energy means for currencies and central banks. Low oil prices are easing pressure on households and businesses while reducing the risk of a resurgence of inflation just as central banks head into a busy week of policy meetings.

“The broad reading of global investors is positive,” Gilbert said. “The continued decline in oil prices is weighing on major banks.”