Global markets rally as US-Iran truce opens door to Hormuz talks; Fed and tech earnings in focus

Global investors turned bullish Sunday evening after the United States and Iran paused hostilities, creating a diplomatic window that could lead to a reopening of the Strait of Hormuz, one of the world’s most critical oil chokepoints.

The immediate market reaction was sharp: Dow Jones Industrial Average futures surged 337 points, or 0.65%, while S&P 500 futures jumped 0.80% and Nasdaq futures shot up 1.28%, driven by a tech-sector revival. South Korea’s Kospi index — increasingly seen as a bellwether for global risk appetite — climbed 74 points, or 1.1%, after chip giants SK Hynix and Samsung Electronics secured new deals that underscored strong demand for semiconductors in the AI buildout.

Oil prices plunged as traders priced in a higher likelihood of restored Hormuz flows. U.S. crude fell 5.44% to $84.45 a barrel, and Brent crude dropped 5.25% to $91.70. Gold, a traditional safe haven, rose 1.15% to $4,118 per ounce as uncertainty persisted over the durability of the truce.

The pause came after nearly two weeks of daily U.S. bombings of Iranian targets, following an Iranian attack that killed U.S. troops in Jordan. President Donald Trump, who had been in “revenge mode,” ordered the halt on Friday. Diplomatic channels are now active: both Trump and Iranian officials have signaled engagement, and separate talks between Iran and Oman center on a framework where Tehran would manage vessel transit through the strait with fewer restrictions on ships.

But any agreement that recognizes Iran’s control over the waterway is likely to face stiff opposition from the U.S. and Iran’s neighbors. Trump, however, is running out of options to ease oil-market strains as global inventories hit critically low levels. The military option has proven ineffective: 40 days of all-out war and 13 days of limited strikes failed to reopen the strait.

Senior U.S. military figures have advised against resuming major combat operations. Axios reported that Adm. Brad Cooper, head of U.S. Central Command, recommended halting the bombing campaign because it had reached the limits of effectiveness. The New York Times also noted that Gen. Dan Caine, chairman of the Joint Chiefs of Staff, privately warned that restarting a full-scale conflict would force Central Command to dangerously deplete its interceptor stockpile in the face of Iranian retaliation.

To complicate matters further, Ukraine struck an Iranian supply ship in the Caspian Sea, expanding the conflict’s geography and raising speculation that Kyiv’s actions could be used as leverage in U.S.-Iran talks.

Any progress on reopening the strait would further depress oil prices, just as the Federal Reserve has struck a more hawkish tone on inflation. Central bankers meet this week, with Wall Street anticipating internal debates over whether to hike rates or hold steady. The decision will also reverberate through the AI trade, which has slumped recently as investors revolt against massive capital expenditures.

Tech earnings this week will provide fresh fuel. Microsoft and Meta report on Wednesday, followed by Apple and Amazon on Thursday. Google parent Alphabet beat earnings estimates last week but revealed negative cash flow due to heavy spending. At the same time, demand for AI capacity remains robust: AI developer Anthropic has asked SK Hynix to supply chips for making its own semiconductors, according to SK Group Chairman Chey Tae Won. Rival Samsung Electronics also landed a contract worth more than $200 billion to make chips for Broadcom, reinforcing the race to build out AI infrastructure.

This story was originally featured on Fortune.com.