Global Risk Sentiment Improves as Iran Deal Hopes Build
Global markets pushed higher as geopolitical tensions in the Middle East showed signs of easing, boosting risk appetite and weighing on oil prices. Optimism grew after statements from Iranian officials and US President Donald Trump pointed toward “great progress” on a potential agreement to end the conflict.
Iran signalled that safe transit through the Strait of Hormuz would be maintained under new procedures, while diplomatic sources indicated that the US and Iran are close to finalizing a framework to end the war. Although isolated incidents continue to highlight underlying risks, markets are increasingly pricing in de-escalation.
Equities rallied globally, with stocks climbing to fresh highs supported by both geopolitical relief and strong corporate earnings. In the US, The Walt Disney Company reported better-than-expected Q2 results, beating estimates on both earnings and revenue while projecting a 16% increase in full-year adjusted EPS. Strength across its entertainment, experiences, and sports segments helped lift sentiment in pre-market trading.
In Asia, risk-on momentum accelerated, with MSCI’s regional index hitting an all-time high. South Korea’s KOSPI Index surged over 6%, driven by technology stocks and AI-related optimism. Samsung Electronics jumped sharply, reaching a $1 trillion valuation milestone, underscoring continued investor enthusiasm for the AI trade.
Oil prices declined for a second consecutive session, with Brent Crude falling toward $108 per barrel as traders priced in reduced supply risks from the Middle East. Meanwhile, currency markets saw notable moves, with the Japanese Yen strengthening over 1% against the US Dollar amid speculation of potential intervention by Japanese authorities following recent volatility.
The US Dollar weakened broadly against its G10 peers, reflecting improved global risk sentiment and reduced demand for safe-haven assets. At the same time, stronger economic data provided additional support to markets, with UK Services PMI coming in above expectations and China’s services sector showing resilient expansion despite ongoing cost pressures.
Overall, markets are being driven by a combination of easing geopolitical risks, strong earnings momentum, and continued optimism around global growth themes—particularly in technology and AI. However, traders remain cautious as negotiations in the Middle East continue to evolve and underlying risks have yet to fully dissipate.
By Amir Amidian
Senior Market Analyst | Zylostar
