Asia Stocks Jump, Oil Slides on US-Iran Deal News

Asian share markets surged Monday, the dollar slipped, and oil prices slid after the United States agreed to a peace deal with Iran, boosting risk appetite and promising to ease global inflationary pressures.

The S&P 500 futures rose 1.2% in early Asia-Pacific trading, while Japan's Nikkei 225 climbed 2.1% and Australia's ASX 200 added 1.8%. Hong Kong's Hang Seng Index jumped 2.5%, led by energy-sensitive sectors. The rally came after the White House confirmed late Sunday that a framework agreement had been reached, lifting sanctions on Iranian oil exports in exchange for verifiable limits on Tehran's nuclear program.

Brent crude futures fell 4.3% to $72.80 a barrel, their lowest since early March. West Texas Intermediate dropped 4.6% to $68.90. The deal adds roughly 1.5 million barrels per day of Iranian crude to a market already facing demand concerns from China's slowing economy. Goldman Sachs analysts said the additional supply could push Brent toward $70 in the near term, assuming full compliance with the agreement's terms.

The dollar index slipped 0.4% to 104.20, its weakest in two weeks. The yen strengthened 0.6% to 149.80 per dollar, while the euro rose 0.3% to $1.0850. The dollar's decline reflected expectations that lower oil prices would reduce imported inflation, giving central banks more room to ease policy. Treasury yields fell 5 basis points to 4.32%, with the 10-year note benefiting from a flight out of safe havens.

Iranian oil exports had fallen to roughly 400,000 barrels per day under U.S. sanctions, down from 2.5 million before 2018. The deal's immediate impact on global supply will depend on how quickly Iran can ramp up production and find buyers. China, which has been the largest buyer of sanctioned Iranian crude, is expected to increase purchases, traders said.

The agreement also removes a key geopolitical risk premium that had kept oil prices elevated since late 2023. Israeli officials, who had opposed the deal, said they would seek security guarantees from Washington. The White House said the framework includes provisions for regional stability and non-proliferation.

For equity markets, the lower oil price is a net positive for most Asian economies, which are net importers of crude. Japan's trade balance stands to benefit most, with every $10 drop in oil prices shaving roughly 0.3% off the import bill, according to Nomura estimates. South Korea and India also stand to gain, though India's subsidy burden on domestic fuel prices may limit the pass-through.

The next concrete marker is the formal signing ceremony, expected within 30 days. Until then, markets will watch for any last-minute objections from Congress or regional allies. The deal's durability will also depend on verification mechanisms, which remain under negotiation.