Iran-US Preliminary Deal Boosts Global Markets: Oil Retreat, Risk Appetite Rises, and Uncertainty Ahead

Keywords: Iran-US deal, Strait of Hormuz, international oil prices, US stock rebound, inflation expectations, risk appetite, cyclical stocks, emerging markets

Introduction

Following the preliminary US-Iran agreement on ceasefire and shipping, global financial markets reacted swiftly: oil prices fell significantly, inflation concerns eased, and risk assets rallied strongly. The three major US stock indices rose, with tech, semiconductor, and high-growth assets particularly strong, as sentiment shifted from risk-off to aggressive risk-on.
However, beneath the surface “good news,” what truly matters is not just the short-term rebound but the medium-to-long-term impact of this geopolitical detente on global energy, inflation, monetary policy, and asset allocation logic.

1. Geopolitical Cooling, Market Sentiment Quickly Repairs

Reports said President Trump stated the Strait of Hormuz is “partially open” and will be fully open on June 19 when the US-Iran MoU is signed. For markets, this means the probability of the worst-case Middle East scenario is declining, and the systemic risk of energy supply disruption is temporarily removed.

As a result, US stocks performed strongly on June 15. The S&P 500 rose 1.65%, the Nasdaq surged 3.07% for its biggest daily gain since March 31, and the Dow hit a record high. Risk appetite improvement quickly spread to high-volatility sectors, with tech and semiconductor stocks leading, showing investors re-embracing growth expectations.

This rally is not purely driven by a single agreement but by simultaneous pricing of three logics: reduced inflation pressure, expanded policy space, and improved earnings outlook. In other words, the easing of geopolitical conflict is repairing the macro narrative previously disrupted by the oil shock.

2. Oil Price Retreat Eases Inflation, Policy Expectations Shift

Energy prices are a key variable for global inflation. As Middle East tensions significantly cool, international oil prices fell to early March lows, down over 30% from the conflict peak. On June 15, Brent and WTI crude both plunged, with WTI briefly dipping below $80/barrel before rebounding, but the overall trend is clearly weaker.

The direct effect of lower oil prices is reflected in US gasoline prices, which fell below $4 per gallon for the first time since mid-April. This helps ease consumer cost pressure and suggests inflation expectations may decline further. For the Fed and other major central banks, this provides greater policy room.

Invesco Asia Pacific global market strategist David Zhao noted that sustained lower energy prices will significantly improve the balance between growth and inflation. Previously, oil supply uncertainty constrained central bank easing expectations; now, with geopolitical tensions easing, conditions for looser policy later may emerge if inflation continues to slow. Such macro changes often boost equity appeal.

3. Risk Assets Rally, But Rebound Foundation Needs Verification

From an asset perspective, markets have already priced in peace expectations. The tech sector, semiconductor sector, and AI capex-related assets saw strong rebounds. Musk’s SpaceX continued to climb after listing, with a market cap exceeding $2.5 trillion, reflecting fund chasing for high-growth tracks.

However, the rebound does not mean uncertainty is gone. Zhao warned that the current MoU is more a framework than a final agreement. While Iran has pledged to clear mines in the Strait during the 60-day ceasefire extension and stop charging transit fees, core issues still need negotiation. In other words, markets have moved away from the “worst case” but are still far from true stability.

JPMorgan strategist Mislav Matejka also noted that as long as geopolitical tensions ease and earnings/inflation remain stable, tilting toward cyclical sectors before year-end may still be the better strategy. This means if oil stays low and profit cycle continues to recover, cyclical sectors like financials, industrials, and discretionary may see more sustained inflows.

4. Strait of Hormuz Reopening: Real Test is “Recovery Speed”

The market’s biggest concern is not just “can it open” but “when will it truly normalize.” Kalshi data shows the probability of the Strait returning to normal navigation before August rose to 58%, indicating the recovery process is in a predictable phase but not yet close to full normalcy.

There are still many real obstacles. First, shipping safety needs time to restore; stranded vessels, crew rotation, maintenance, and insurance arrangements cannot complete quickly. Second, whether Gulf infrastructure is damaged and production recovery pace will affect actual supply of crude and related commodities. Third, whether shipping insurance rates return to normal will directly impact trade costs and global logistics efficiency.

International Transport Workers’ Federation Secretary-General Stephen Cotton even believes normal shipping patterns could take weeks or months. This shows agreement signing does not equal immediate market recovery; real supply chain repair lags political texts.

Societe Generale commodity research head Michael Haigh noted that even if shipping resumes, it will take time for oil to reach Asia and be refined. If the Strait reopens by end of June, real supply relief may not come until end of August, and full normalization may wait until September. This means oil prices could remain volatile in the short term, and optimism about “supply recovery” needs time to be tested.

5. Outlook: From Safe Haven Repair to Structural Opportunities

Overall, the core market change is that the inflation shock expectation from geopolitics is fading, and risk appetite is regaining dominance. For global asset allocation, this brings at least three implications.

First, equity valuation repair may continue but not smoothly. If oil stays low and inflation continues to ease, stocks, especially growth and cyclical sectors, could get more support.
Second, emerging markets and Europe may have relatively more upside. Zhao suggests these markets are more cycle-sensitive and valuations more attractive; if global risk appetite keeps improving, funds may rotate further into these regions.
Third, AI capex cycle remains an important pillar for US markets. Whether from continued cloud provider spending or increased demand for data center hardware, it supports North Asian exports and related corporate earnings repairs, offering structural opportunities for Asian assets.

On earnings, 10 of 11 S&P 500 sectors reported positive year-over-year profit growth in Q1, with overall earnings up 28%, showing corporate fundamentals have not worsened significantly due to short-term shocks. If geopolitical risks remain manageable, oil moderate, and rate environment friendly, global stocks could continue upward on earnings support.

Conclusion

The biggest change from the Iran-US preliminary deal is not just lower oil prices, but a re-pricing of “controllable inflation, return of policy space, and risk asset revaluation.” In the short term, risk appetite rise, stocks rally, and oil decline form a clear market theme; but medium to long term, the deal‘s implementation details, shipping recovery pace, regional security, and supply chain repair speed will determine how far this run goes.

In other words, markets are shifting from “worrying about worst case” to “verifying recovery process.” For investors, this is both a window for risk appetite improvement and an important time to stay alert and monitor pace. The real test is not whether the agreement is signed, but whether global energy order can move from short-term relaxation to sustained stability.