Iran Deal Hopes Ignite Market Rally Amid Strait Blockade

US equities roared back Monday, propelled by President Donald Trump's signals that Iran seeks a deal, even as a US naval blockade tightened around the Strait of Hormuz to squeeze Tehran's oil exports.[1] The S&P 500 jumped 1% to 6886.24 points, fully recovering losses since the conflict's onset, while the Dow Jones Industrial Average rose 0.6% to 48,218.25 and the Nasdaq 100 gained 1.1% to 25,383.72, buoyed by a 3.6% surge in Microsoft shares.[1] Asia-Pacific markets followed suit Tuesday, with South Korea's Kospi up over 3%, Japan's Nikkei 225 ahead 2.4% and Australia's S&P/ASX 200 rising 0.6%.[1] Oil prices eased amid the optimism, with West Texas Intermediate falling 2% to $97 per barrel and Brent crude dropping 1% to just under $100, defying Iran's warnings of higher global energy costs from the blockade.[1] This retreat follows sharper declines last week after truce talks, when WTI plunged 13.4% and Brent fell from $112 in March to about $95.[2] The Strait's partial closure had spiked prices earlier, pushing futures into steep backwardation as physical demand and speculation clashed.[3] European stocks bucked the trend, with the EuroStoxx 50 down 0.4% and Switzerland's SMI off 0.3% after peace talks collapsed, though Hungary's Bux index soared nearly 5% on opposition leader Peter Magyar's election win, promising EU fund access.[1] The US Dollar Index weakened and Treasury yields fell across the curve, while gold edged higher to $4770 as a haven.[1] Prior US-Iran negotiations in Islamabad, Pakistan this April crumbled, reversing a 3.5% S&P 500 gain and 7.4% emerging markets rally from truce hopes, alongside a 10% bitcoin spike.[2] Charles Schwab analysts caution the relief rally stems from unwinding hedges rather than resolution, with volatility high on headline risks like Hormuz traffic and energy infrastructure.[3] A holding truce could normalize flows, but escalation looms.[3] Goldman Sachs shares bucked the US uptrend, dropping 1.9% on criticism of weak first-quarter fixed income, currency and commodities trading.[1] Investors now eye Trump's next moves, as de-escalation could boost Iran's oil return to markets, lifting risk assets long-term despite short-term swings.[5]