Markets Rally on Iran De-escalation as Yen Surges Following Intervention

Brent crude futures plummeted more than 5%, dropping $4.40 to $83.52 a barrel after President Donald Trump signaled potential diplomatic talks regarding the Strait of Hormuz. This shift in geopolitical risk provided breathing room for equity markets, with S&P 500 and Nasdaq futures tracking higher ahead of a heavy week of corporate earnings. European markets mirrored this strength, as the German DAX climbed 1.4% to reach an intra-day record.

Corporate performance remains a primary driver for investors, as 86% of S&P 500 companies reporting so far have exceeded earnings expectations. Market focus also shifted toward potential consolidation in the pharmaceutical sector, following reports of preliminary merger talks between Bristol Myers Squibb and AstraZeneca—a deal that could forge a $400 billion drugmaker. Despite this, Asian markets faced headwinds, with Japan’s Nikkei closing 1% lower and South Korea’s KOSPI sliding 5% as investors remained wary of the capital-intensive nature of AI investments.

The most significant movement occurred in currency markets, where the yen surged to a three-month high of 155.2 per dollar. Japan’s Finance Ministry confirmed that joint yen-buying operations were underway, supported by the U.S. government. U.S. Treasury Secretary Scott Bessent bolstered the move by suggesting an expansion of the Federal Reserve’s repurchase facility to provide liquidity. With net short yen positions reaching a two-year high of $12.5 billion, the coordinated intervention has effectively forced a defensive retreat among currency bears.