European Shares Set For Strong Start Amid Iran Deal Optimism

(RTTNews) - European stocks are seen opening sharply higher on Monday as expectations rise that the U.S. and Iran are closing in on a deal to end the three-month-old war. That said, trading volumes are likely to remain thin due to a holiday in the United States for Memorial Day.

Media reports suggest that the U.S. and Iran have developed a memorandum of understanding 'framework' to reach a final deal.

U.S. Secretary of State Marco Rubio said a "pretty solid" proposal is on the table to reach an agreement with Iran, while insisting that President Donald Trump is "not going to make a bad deal."

Trump said on Saturday a peace deal with Iran had been "largely negotiated." A U.S. official reportedly said that both the sides have in principle agreed to reopen the Strait of Hormuz and that Tehran has agreed to dispose highly enriched uranium.

Israeli Prime Minister Benjamin Netanyahu posted on X that any final agreement would require dismantling Iran's nuclear enrichment facilities and removing enriched nuclear material from its territory.

Iran's President Masoud Pezeshkian on Sunday said that Tehran is "ready to reassure the world that we are not seeking nuclear weapons."

Tasnim news agency reported that the United States is still obstructing certain clauses of the potential peace MoU, including the release of Iran's frozen assets.

Even if the Strait of Hormuz is opened, analysts say that there is so much uncertainty over how long it will take to repair production facilities and infrastructure to ramp up production of energy and other goods in the region to pre-war levels.

Beyond the geopolitical headlines, inflation readings across Europe, the April reading of the U.S. personal consumption expenditures (PCE) price index, and earnings from the likes of Dell, HP, Costco and Best Buy will be in the spotlight as the week progresses.

Bond strategists expect global bond yields to remain elevated even if the Iran war ends. Traders currently price in a Federal Reserve rate hike before year-end as Kevin Warsh takes the helm at the U.S. central bank.

Warsh, who was sworn in on Friday as the chairman of the Federal Reserve, signaled a shift toward Alan Greenspan's monetary policy, favoring flexibility and lower interest rates.

Asian markets were broadly higher as the U.S. and Iran edged towards a deal. The dollar weakened against its major peers, helping gold prices jump over 1 percent to $4,557 an ounce.

Brent crude futures slumped nearly 6 percent below $98 a barrel, hitting two-week lows.

U.S. stocks eked out modest gains on Friday as Treasury yields eased amid signs of progress in talks to end the U.S.-Iran war.

Secretary of State Marco Rubio claimed the U.S. and Iran have made "some progress" in negotiations to end the war but cautioned he doesn't want to be "overly optimistic".

Rubio said that Iran imposing tolls for transit in the Strait of Hormuz is "unacceptable" and "would make a diplomatic deal unfeasible," adding President Trump has "other options" if the U.S. and Iran can't get a "good deal."

Traders largely shrugged off new data that showed U.S. consumer sentiment tumbled to a fresh record low in May, and long-inflation expectations worsened notably as a result of elevated oil prices.

While the Dow surged 0.6 percent to reach a new record closing high, the S&P 500 and the tech-heavy Nasdaq Composite gained 0.4 percent and 0.2 percent, respectively.

European stocks rose broadly on Friday amid continued optimism around the trajectory of talks to end the Iran war.

The pan-European STOXX 600 advanced 0.7 percent. The German DAX rallied 1.2 percent, France's CAC 40 rose by 0.4 percent and the U.K.'s FTSE 100 added 0.2 percent.