A look at the day ahead in European and global markets from Ankur Banerjee

The ever-inching prospect of a deal to end the Iran war ​and open the Strait of Hormuz paved the way for investors ‌to put on their risk-on hat on Monday, sending stocks in Tokyo and Taipei to record highs while pushing oil prices and the U.S. dollar lower.

Doubts also ​linger though, especially after U.S. President Donald Trump played down hopes ​of an imminent breakthrough, noting he had told his representatives ⁠not to rush into any deal with Iran even as pressure ​builds to find a solution.

With markets in the UK and U.S. closed ​for public holidays, liquidity will be thin as traders keep an eye on headlines.

The will-they-won’t-they saga over a deal has left investors jittery but overall the hope ​is that it’s a matter of when, not if, a deal ​is agreed to end the nearly three-month-old conflict.

Sentiment was also helped after shipping data ‌showed ⁠two liquefied natural gas tankers are exiting the Strait of Hormuz, while a supertanker with Iraqi crude for China left the Gulf on Saturday after being stranded for nearly three months.

Still, the reality is that ​a resolution won’t ​push oil prices ⁠back to the levels they were before the war and the energy supply chain will take time ​to recover, meaning inflation worries are going nowhere and ​neither ⁠are calls for higher-for-longer rates.

Traders are now fully pricing in a 25-basis-point rate increase from the U.S. Federal Reserve in January 2027, a stark reversal ⁠from ​two rate cuts expected this year before ​the war began.

Key developments that could influence markets on Monday:

U.S.-Iran talks