The IBEX 35 opened Monday with a sharp advance, surpassing the 19,000-point mark for the first time in its history. The session was characterized by a surge in risk appetite following an agreement between the United States and Iran to end their conflict and reopen the Strait of Hormuz.

The pact, though many details remain to be finalized, has radically shifted the market tone. Investors are reacting with optimism to the prospect of easing global inflationary pressures.

Pakistani Prime Minister Shehbaz Sharif announced on social media that a peace agreement had been reached, while U.S. President Donald Trump noted that the understanding includes the reopening of the strategic strait, though he did not specify the underlying conditions.

The news has encouraged positioning in both equities and fixed income, yet uncertainty persists regarding implementation and the possibility that Iran and Oman may regulate traffic in the area through the collection of tolls.

Nevertheless, relief on the energy front has led investors to scale back expectations for further global interest rate hikes. This comes during a week packed with central bank meetings in the United States, the United Kingdom, Japan, Australia, Switzerland, Sweden, Norway, and Russia.

Regarding the Federal Reserve (Fed), it is widely expected to maintain rates between 3.50% and 3.75% in the first meeting chaired by Kevin Warsh, as the market scrutinizes any signals of a potential shift in monetary policy bias.

Investors have rapidly discounted the probability of additional hikes this year. According to LSEG's IRPR tool, they currently anticipate cumulative increases of approximately 15 to 20 basis points through the end of 2026.

This environment has been reinforced by a sharp decline in oil prices, which had already partially priced in a potential deal. Brent crude fell 4.7% to $83.24 per barrel, far from the May peak of $126.41, while U.S. crude retreated 5.5% to $80.16, though it remains above pre-conflict levels.

"The message for investors is clear: the energy risk premium is falling, the tone in European equities is improving, and fears of a new inflationary shock are partially cooling," said Sergio Avila, an analyst at IG Spain.

"The drop in WTI (...) is key because a persistent rise in crude would have complicated the outlook for central banks, companies, and consumers. Less energy tension implies, in principle, less pressure on inflation, corporate margins, and rate expectations."

However, the analyst warned that the market cannot yet consider geopolitical risk a closed chapter.

"The agreement still requires formalization, execution, and monitoring. Furthermore, the situation in the Middle East remains fragile. Therefore, the current movement should be interpreted as a withdrawal of the risk premium, not as a definitive solution."

Against this backdrop, at 0701 GMT, the Spanish benchmark IBEX 35 was up 283.20 points, or 1.51%, at 19,047.60 points, while the FTSE Eurofirst 300 index of major European stocks advanced 0.86%.

This represents a new record for the Spanish index, whose previous closing high was 18,764.4 points reached on Friday amid expectations of peace in the Middle East. In intraday terms, the previous record was 18,796.3 points, also recorded on Friday.

In the banking sector, Santander rose 2.58%, BBVA gained 2.54%, Caixabank advanced 1.51%, Sabadell climbed 1.87%, Bankinter appreciated 1.66%, and Unicaja Banco rose 1.69%.

Among major non-financial stocks, Telefonica gained 0.76%, Inditex advanced 1.86%, Iberdrola slipped 0.10%, Cellnex rose 1.80%, and the oil company Repsol lost 3.96%.

(Reporting by Tomas Cobos: editing by Benjamin Mejias Valencia)