Global markets trade cautiously as US-Iran deal optimism balances geopolitical risks

Global markets traded cautiously Monday as optimism over a potential agreement between the United States and Iran supported risk appetite, while investors continued to monitor geopolitical developments, oil prices and major economic data due later this week. Investor sentiment improved last week after reports suggested Washington and Tehran were moving closer to an agreement aimed at extending the current ceasefire and launching negotiations over Iran's nuclear program.

Framework details

Under a reported 60-day framework document, the Strait of Hormuz would be reopened and restrictions on maritime traffic involving Iranian ports would be eased. However, US Vice President JD Vance said that while both sides are close to reaching an agreement, differences remain regarding future negotiations on Iran's nuclear program.

Economic warnings

The IEA, IMF, World Bank, and WTO warned that the Middle East conflict continues to pose risks to the global economy, energy markets, and trade flows. They noted that if maritime shipping does not return to normal levels, rapidly declining oil inventories ahead of peak summer demand could create greater risks for fuel security and market stability.