Global markets have moved higher on a 60-day US-Iran peace roadmap and lower oil prices, though the rally is running without full conviction as Hormuz chokepoint risks persist.
Patrick Munnelly at Tickmill Group said Hormuz risks have "compressed, not disappeared," and framed the broader picture as one where multiple headwinds limit how far the relief trade can run.
China's domestic demand is deteriorating, adding a separate drag on risk appetite beyond the Middle East ceasefire calculus.
The Federal Reserve adds a further complication: policymakers left rates unchanged at their 16-17 June meeting in a range of 3.5% to 3.75% but signalled growing support for hikes this year, and markets are repricing accordingly toward further tightening rather than easing.
Fed Governor Michelle Bowman separately attended a private dinner hosted by Bank of America in New York on the day the FOMC concluded its meeting, during a period when officials are restricted from commenting on monetary policy, according to a Wall Street Journal report cited by Bloomberg.
AI-driven equity momentum, particularly across Asia, remains the principal support for stocks in this environment, Munnelly said.
This week's US inflation and consumer spending data will be the next test of whether cheaper oil can offset a more hawkish Fed narrative.
