Global equity markets advanced on Monday as traders reacted to reports of a potential peace agreement between the United States and Iran, a development that could significantly reduce shipping risks in the Strait of Hormuz.
The optimism followed a series of diplomatic signals suggesting that Washington and Tehran are moving closer to a resolution of their long-standing tensions.
The prospect of a deal has prompted a broad-based repricing of risk assets.
Investors are increasingly factoring in the possibility that the Strait of Hormuz, a critical chokepoint for global oil supplies, could see a normalization of traffic if hostilities de-escalate.
This shift in sentiment has provided a tailwind for energy and shipping stocks that have been weighed down by the threat of disruption.
The diplomatic breakthrough comes against a backdrop of heightened regional instability.