U.S. stock markets gained on Tuesday following the formal signing of a peace agreement between the United States and Iran, while oil prices continued their decline amid renewed optimism over energy supplies. The S&P 500 rose 1.1 percent by early afternoon trading in New York, led by strong performances in technology shares. The Nasdaq Composite increased 1.3 percent, and the Philadelphia Semiconductor Sector index surged 6 percent to reach a new record high.

The U.S. and Iranian governments electronically finalized the peace deal overnight, which extends a ceasefire originally established in April by an additional 60 days. The agreement also includes a gradual reopening of the Strait of Hormuz, a critical shipping lane for global oil exports. Traffic through the strait increased on Tuesday morning, alleviating concerns about energy shortages.

Brent crude, the international oil benchmark, dropped as low as $76.54 per barrel before recovering slightly to trade around $77.60 by late afternoon in London, marking a 2.5 percent decline for the day. The U.S. West Texas Intermediate benchmark fell 2.8 percent to about $74.60 per barrel.

In Europe, market reactions were mixed following an initial boost earlier in the week from the peace developments. The Stoxx Europe 600 index declined 0.3 percent, while the FTSE 100 in London closed down 1 percent. Conversely, Germany’s DAX and France’s CAC 40 each advanced 0.4 percent.

Traders increased their expectations for upcoming interest rate hikes by the Federal Reserve, putting pressure on U.S. debt markets overnight. Futures contracts now fully price in a quarter-point increase by October, a significant acceleration compared to expectations just days ago. Despite this, government bond yields remained relatively stable. The yield on the 10-year U.S. Treasury note dipped slightly to 4.44 percent, while the 10-year U.K. gilt yield held steady at 4.76 percent ahead of the Makerfield by-election results, where Labour leadership candidate Andy Burnham is seeking to reenter Parliament.

The U.S. dollar gained 0.7 percent against a basket of major currencies, continuing a rally that began earlier in the week following Kevin Warsh’s first day as Federal Reserve chair. The euro weakened to $1.146, its lowest level since late March, while the British pound fell 0.6 percent to $1.322 against the dollar.

Precious metals also experienced declines, with gold prices dropping 1 percent to $1,215 per troy ounce and silver falling 3 percent to $65.93 per troy ounce.