Global Markets Rally as Strait of Hormuz Peace Deal Looms

President Donald Trump and Pakistani Prime Minister Shehbaz Sharif announced the accord late Sunday, with a formal signing scheduled for Friday in Switzerland. While Trump declared via social media that the U.S. naval blockade would end and the strait would open toll-free, industry experts warn that restarting dormant facilities and rerouting global tanker traffic is a complex, time-consuming process. Brent crude dropped more than 4% to approximately $83 per barrel, hitting its lowest level since early March.

Investors responded with widespread optimism, pushing Japan's Nikkei and South Korea's KOSPI up by 5%, while the STOXX 600 reached a record high. The potential easing of the energy supply squeeze offers relief for global inflation, which saw U.S. headline CPI exceed 4% in May. This development shifts the focus toward central bank policy, particularly Federal Reserve Chair Kevin Warsh’s debut meeting this Wednesday. While markets anticipate rates will hold steady at 3.50%-3.75%, the cooling energy sector may bolster the case for a more dovish stance despite recent robust U.S. non-farm payroll data.