Global Markets Surge as Iran Reopens Strait of Hormuz Following Regional Truce

US stock indices rallied sharply on Friday as geopolitical tensions in the Middle East eased, triggered by Iran's decision to reopen the Strait of Hormuz. The announcement comes in the wake of a truce between Israel and Lebanon, providing a critical reprieve to global energy markets and the broader economic outlook. The reopening addresses a severe oil shock that has plagued global markets since the onset of conflict seven weeks ago. As a vital artery for global petroleum shipments, the status of the Strait of Hormuz has been a primary driver of systemic risk and inflationary pressure over the past two months. Market reaction was immediate and broad-based. The S&P 500 Index climbed 0.8%, reaching another record high, while the Dow Jones Industrial Average surged 1.4%. The tech-heavy Nasdaq 100 also posted gains of 0.7%. Beyond equities, the relief rally extended to fixed-income and volatility markets. The VIX declined and bond yields tumbled as investors recalibrated their expectations for monetary policy. Traders are now wagering that the reduction in geopolitical risk will allow the Federal Reserve to resume cutting interest rates before the end of the calendar year.