Global stock markets advanced sharply Monday following news of a tentative agreement between the United States and Iran aimed at reopening the Strait of Hormuz and easing the disruption of crude oil supplies. The accord, though preliminary and expected to be formally signed in Switzerland on Friday, contributed to a notable decline in oil prices and heightened investor optimism about inflation and economic stability.

In the U.S., major indexes closed at or near record levels. The Standard & Poor’s 500 rose 122.83 points (1.7%) to 7,554.29, while the Dow Jones Industrial Average gained 468.77 points (0.9%) to close at 51,671.03. The Nasdaq Composite posted a significant 3.1% jump, adding 795.10 points to finish at 26,683.94—its largest one-day percentage increase since late March. Canada’s S&P/TSX Composite also reached a new high, rising 337.79 points (0.97%) to 35,275.64.

The oil market responded to the deal with a roughly 5% decline in crude futures, bringing Brent crude prices back to levels last seen in early March, around $83 per barrel. U.S. crude futures settled near similar lows. Though prices remain above pre-conflict levels near $70, the reduction from recent peaks above $100 per barrel reduced inflation pressure for consumers and businesses. This shift was seen as crucial amid ongoing inflation concerns and rising interest rates globally.

The tentative agreement does not resolve all contentious issues, particularly Iran’s nuclear program and the broader regional conflicts involving Israel and Lebanon. Negotiations on these topics are expected to continue over the next 60 days, leaving some uncertainty about the durability of the deal. Analysts noted that even if the Strait of Hormuz reopens as expected on Friday, it will take months for full energy flows to normalize.

Market sectors sensitive to fuel costs notably benefited from the development. Airline stocks like United Airlines rose over 4%, and cruise operator Carnival climbed more than 3%. Conversely, energy stocks declined due to lower oil prices. Technology shares, especially those linked to artificial intelligence, recorded strong gains, with companies such as Nvidia, Micron Technology, and Advanced Micro Devices rallying between 3% and 11%. SpaceX, the Elon Musk-led aerospace and AI firm, surged nearly 20% in its second day of trading, pushing its market valuation beyond $2 trillion.

Investor sentiment also reflected hopes that easing inflationary pressures could allow central banks to maintain current interest rates rather than raise them further. The U.S. Federal Reserve is scheduled to announce its decision later this week under new Chair Kevin Warsh, nominated by former President Donald Trump. Market expectations for a rate hike this year have declined in recent days, partly due to optimism around the Iran deal and easing energy costs.

Internationally, equity markets similarly gained as Japan’s Nikkei 225 advanced 5% to a record high and South Korea’s Kospi increased more than 5%, backed by strong performances in tech sectors. European markets generally rose, though London’s FTSE 100 slipped slightly.

Overall, the tentative U.S.-Iran agreement triggered a broad rally in global financial markets amid hopes that improved stability in Middle East oil supplies will mitigate inflationary risks, though the path to a comprehensive and lasting resolution remains uncertain.