Optimism over a US-Iran memorandum of understanding and the expected reopening of the Strait of Hormuz is driving oil prices sharply lower. The deal would lift the naval blockade, remove immediate supply risks, and allow Iranian crude exports, adding supply to the market.
Lower oil prices and declining interest rates are causing a rotation in equity markets from technology and growth stocks into procyclical areas. The Dow Jones Industrial Average is rallying while the Nasdaq 100 is selling off, as cyclicals benefit directly from disinflationary tailwinds.