Global financial markets rallied on Friday following reports of a proposed peace deal between the United States and Iran, which includes commitments to reopen the Strait of Hormuz and lift U.S. oil sanctions, according to Iranian state media [2][3]. South Korean stocks led the gains, with the KOSPI index closing up 4.6%, buoyed by optimism over the potential deal and an overnight rally in U.S. equities [1]. The rally was broad-based, particularly benefiting technology and export-oriented companies, and was further fueled by increased foreign investor participation [1].
The draft 14-point memorandum of understanding reportedly requires Iran to reopen the Strait of Hormuz within 30 days and the U.S. to suspend oil sanctions, release half of Iran's frozen funds, and lift the naval blockade before final negotiations begin [2]. Additionally, the agreement would necessitate the withdrawal of all American forces from Iran and the presentation of reconstruction plans worth at least $300 billion by the U.S. and its allies [2]. President Donald Trump stated on Thursday that a "great settlement of the war" had been reached, pending the finalization of documents, and confirmed discussions with Israeli Prime Minister Benjamin Netanyahu and other regional leaders [2]. Netanyahu's office acknowledged the conversation and expressed appreciation for Trump's commitment to include restrictions on Iran's nuclear capabilities in the final agreement [2].
The proposed deal had an immediate impact on global markets. European shares surged, with the pan-European Stoxx 600 index gaining 1.8% and most major bourses rising around 2% in morning trade [2][3]. Luxury stocks, which had been negatively affected by the Iran war due to the Middle East's importance as a growth market, rebounded sharply: LVMH, Kering, and Hermes shares rose about 5%, while Richemont climbed 3.4% [3]. The closure of the Strait of Hormuz had previously driven up energy prices and inflation, impacting luxury sales and broader economic sentiment [3]. Oil prices fell in response to the news, with U.S. crude futures for July delivery dropping 1.61% and Brent futures for August losing 1.75% [2].
Market analysts noted that the KOSPI's surge was accompanied by heightened volatility and leveraged trading, raising concerns about the sustainability of the rally [1]. Technical indicators suggested further upside potential if geopolitical risks continue to subside, but investors were cautioned to watch for possible retracements [1]. The luxury sector, which had suffered from the conflict, saw renewed optimism as the tentative peace deal signaled a possible return to stability in a key market [3]. However, the agreement remains subject to finalization, and uncertainty persists regarding its implementation [2][3].
CONCLUSION
The proposed U.S.-Iran peace deal has sparked a strong rally in global equities, particularly benefiting South Korean and European luxury stocks, while easing pressure on oil prices. Despite the positive market reaction, analysts and investors remain cautious as the agreement awaits finalization and geopolitical risks linger.