Global stock markets surge as US and Iran announce peace framework

Stock markets across Asia and Europe surged Monday following the announcement of a framework to end the United States-Israel war on Iran, with investors responding to reduced geopolitical risk and expectations that the Strait of Hormuz will reopen.

Japan's Nikkei 225 benchmark index soared 5.5 percent in morning trading, while South Korea's Kospi jumped as much as 5.7 percent. Taiwan's Taiex climbed as much as 2.7 percent, and Australia's ASX200 rose about 1.5 percent. Hong Kong's Hang Seng Index rose about 1 percent.

European stock markets hit record highs at the start of trading. The pan-European Stoxx 600 index jumped 0.9 percent to 639 points, surpassing the previous record high set just before the Iran war began. Shares rose in London, Frankfurt, Paris, Madrid and Milan. Mining and travel companies drove the rally, while oil company shares declined.

Oil prices fell to a three-month low following the announcement. The price decline reflects expectations that reopening the Strait of Hormuz will increase global oil supply. President Trump announced that a deal with Iran had been reached, with officials saying the strait is expected to reopen within days.

Matt Britzman, senior equity analyst at Hargreaves Lansdown, said global equity markets started the week firmly on the front foot after the announcement, noting that the move gave investors a clear reason to dial back some of the geopolitical risk premium that had hung over markets, especially as the Strait of Hormuz is expected to reopen.