A look at the day ahead in European and global markets

By Ankur Banerjee, Asia Finance & Markets Breaking News Correspondent

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The ever-inching prospect of a deal to end the Iran war and open the Strait of Hormuz paved the way for investors ‌to put on their risk-on hat on Monday, sending stocks in Tokyo and Taipei to record highs while pushing oil prices and the U.S. dollar lower.

Doubts also linger though, especially after U.S. President Donald Trump played down hopes of an imminent breakthrough, noting he had told his representatives ⁠not to rush into any deal with Iran even as pressure builds to find a solution.

Vessels in the Strait of Hormuz, Iran, May 22, 2026. Majid Asgaripour/WANA (West Asia News Agency) via REUTERS

With markets in the UK and U.S. closed for public holidays, liquidity will be thin as traders keep an eye on headlines.

The will-they-won't-they saga over a deal has left investors jittery but overall the hope is that it's a matter of when, not if, a deal is agreed to end the nearly three-month-old conflict.

Graphics are produced by Reuters

Sentiment was also helped after shipping data ‌showed ⁠two liquefied natural gas tankers are exiting the Strait of Hormuz, while a supertanker with Iraqi crude for China left the Gulf on Saturday after being stranded for nearly three months.

Still, the reality is that a resolution won't push oil prices ⁠back to the levels they were before the war and the energy supply chain will take time to recover, meaning inflation worries are going nowhere and neither ⁠are calls for higher-for-longer rates.

Traders are now fully pricing in a 25-basis-point rate increase from the U.S. Federal Reserve in January 2027, a stark reversal ⁠from two rate cuts expected this year before the war began.