Nasdaq 100 gains 2% as Trump says Hormuz reopening talks underway

Oil's slide on Hormuz reopening hopes lifted U.S. equities Monday, with the Nasdaq 100 up 2% and Brent crude down 5% to $83.49.

The Nasdaq 100 gained 2% Monday as President Donald Trump said talks were underway to reopen the Strait of Hormuz as early as tomorrow, easing oil-driven inflation fears.

"The first phase of negotiations is the reopening of the strait," Trump said, adding that Hormuz could reopen as early as tomorrow. The comments follow his weekend decision to cancel planned strikes on Iran after regional powers indicated a deal to reopen the waterway.

The S&P 500 rose 1.5%, the Dow Jones Industrial Average climbed 591 points, or 1.1%, and the Nasdaq composite advanced 2.2%, according to AP data. Brent crude sank 5% to $83.49 a barrel, down from a July range that careened between $72 and $102 as war fears gripped the market. The 10-year Treasury yield fell to 4.69% from 4.75% late Friday, though it remains well above its 3.97% pre-war level.

The Strait of Hormuz handles roughly 20% of global oil supply, and its closure has been the primary driver of energy-driven inflation fears. A reopening would remove a key geopolitical risk premium from crude prices, potentially easing pressure on the Federal Reserve and supporting further equity gains. United Airlines rose 5.2% and American Airlines climbed 4.2% as fuel costs eased.

Oil's Slide Reshapes the Inflation Calculus

Brent crude has fallen 17% from its July 23 high of $102 a barrel, though it remains about 20% above its July 2 low of $70.10. The pullback comes as OPEC+ agreed another token September output increase, completing the theoretical revival of supplies halted in 2023 and creating scope to add barrels once the war ends.

Iran denies Trump's claim that it sought a pause in strikes, and the strait remains shut, with Tehran insisting it will never return to the pre-war status quo. Iran-Oman talks are in final stages on a new route through the waterway, though the discussions do not cover whether it stays open or closed, leaving the core dispute unresolved.

The equity rally also drew support from a strong earnings season. Companies in the S&P 500 are on track to deliver earnings per share 47% higher than a year earlier, according to FactSet, with more than half of reporters having beaten estimates. A report Monday showed U.S. manufacturing growth accelerated to its strongest level since 2022.

Asia's Wild Ride Continues

The relief rally in U.S. equities contrasts with continued turbulence in Asia. Seoul's Kospi fell 5.1% Monday, coming off Friday's 17.9% surge that was its best day in history, as Samsung Electronics and SK Hynix gave back a chunk of record gains. Tokyo's Nikkei 225 fell 0.9% after the United States and Japan confirmed they had moved together to prop up the value of the yen, a rare coordinated intervention not seen since 2011.

The yen's sharpest rebound in almost two years came after Tokyo and Washington conducted joint intervention totaling around 8.45 trillion yen ($52.8 billion) on Thursday, with the New York Fed selling euros to buy yen on Friday. South Korea sold dollars alongside Japan, lifting the won 2% to a nine-month high.

For U.S. investors, the key question is whether the Hormuz reopening materializes. The risk remains that any pause in strikes will not hold without a clear agreement, and escalation pressure persists with Houthis threatening the Bab el-Mandeb. The next test is Trump's stated timeline of tomorrow for the strait's reopening.

This article is for informational purposes only and does not constitute investment advice.