Global stocks set for best Q2 in six years as Iran deal fuels rally

Global equity markets are poised to close out their strongest second quarter in six years on Tuesday, capping a dramatic reversal from the oil-shock fears that gripped investors earlier in 2026. A U.S.-Iran memorandum of understanding signed in mid-June, a record-breaking rally in semiconductor stocks, and broadening gains across Europe and Japan have powered the turnaround.

The Iran Deal That Changed Everything

The 14-point memorandum of understanding, formally signed on June 19 by President Donald Trump and Iranian President Masoud Pezeshkian, declared an immediate and permanent cessation of military operations and committed both sides to negotiating a final deal within 60 days. The agreement called for the lifting of the U.S. naval blockade, the reopening of the Strait of Hormuz, the removal of sanctions on Iranian oil exports, and a $300 billion reconstruction plan for Iran.arabcenterdc+2

The deal rewired the quarter's trajectory. Brent crude, which had surged to $118 per barrel at the end of March after the conflict effectively shut the Strait of Hormuz, tumbled following the agreement. Reuters reported that Brent settled at $83.17 on the day Trump announced the signing. By late June, U.S. crude briefly dipped below $70 for the first time since before the February 28 airstrikes, as tankers resumed transit through the strait. Bloomberg reported oil was headed for its biggest quarterly decline since the pandemic.reuters+3

Tech and Chips Power the Rally

Semiconductor stocks provided the fundamental engine beneath the quarter's gains. The Philadelphia Stock Exchange Semiconductor Index PHLX Semiconductor Index ↘ 12.13% soared 74% in the second quarter, putting it on pace for its best quarter ever, according to the Detroit News. The Wall Street Journal ↘ 13.24% reported in late May that the PHLX Semiconductor Index had posted its best start to any year on record, climbing 82% in 2026, with SanDisk Western Digital Corporation ↘ 17.35% up 570%, Intel ↘ 10.33% more than tripling, and Samsung, Micron ↘ 17.46%, and SK Hynix all ascending to $1 trillion valuations. The S&P 500 reached new all-time highs after nine consecutive weekly gains in May, returning 11.3% year-to-date through month-end.wsj+2

Europe and Japan Join the Party

Barclays ↘ 3.71% moved to capitalize on the shifting landscape, raising its year-end STOXX 600 target to 670 from 620 and dropping its underweight stance on European equities. The bank cited easing oil prices and reduced stagflation risks following the U.S.-Iran deal, according to Reuters. Barclays also lifted its full-year earnings growth forecast for the STOXX 600 to 12% from 10%.investing+2

Japan's Nikkei 225 closed above 72,000 for the first time in history on June 22, driven by buying in AI and semiconductor shares. Yen weakness, with USD/JPY testing its 2024 highs near 162, provided an additional tailwind for Japanese exporters. Goldman Sachs noted that European earnings had been upgraded by six to seven percent on average in 2026, with strength extending well beyond energy into financials, chemicals, and utilities. The quarter closes Tuesday with oil as the clear loser and equities riding a broadening wave of momentum into the second half.youtube+3