U.S. stock futures and South Korea’s Kospi index rose Sunday evening as the U.S. and Iran maintained a pause in attacks, creating room for negotiations that could reopen the Strait of Hormuz. Wall Street was also preparing for a busy week that includes major technology earnings and the Federal Reserve’s policy meeting.

Futures tied to the Dow Jones Industrial Average climbed 337 points, or 0.65%. S&P 500 futures advanced 0.80%, while Nasdaq futures rose 1.28%.

South Korea’s Kospi index, which has recently served as a bellwether for global equities, gained 74 points, or 1.1%, as chip giants SK Hynix and Samsung secured new deals.

Oil prices fell sharply. U.S. crude tumbled 5.44% to $84.45 a barrel, while Brent crude dropped 5.25% to $91.70. Gold rose 1.15% to $4,118 per ounce.

President Donald Trump and Iranian officials have said both sides are actively engaged in diplomacy following nearly two weeks of daily bombardment.

Separately, Iran and Oman are also holding talks. A potential arrangement under discussion would center on Iran managing vessel transit through the Strait of Hormuz with fewer restrictions on ships. The waterway is one of the world’s most important energy chokepoints, linking Gulf producers to global crude and liquefied natural gas markets, which is why even partial restrictions can quickly become a concern for inflation-sensitive investors.

The U.S. and Iran’s neighbors are unlikely to accept any arrangement that recognizes Tehran’s control over the narrow waterway. At the same time, Trump is running out of options to reduce pressure in the oil market, which is heading toward a crisis as inventories fall to critically low levels.

The U.S. has also moved more troops and aircraft into the Middle East in case Trump decides to resume major combat operations. However, 40 days of all-out war and 13 days of limited strikes did not reopen the Strait of Hormuz.

Sources told Axios that U.S. Central Command chief Adm. Brad Cooper recommended halting the recent bombing campaign because it had reached the limit of its effectiveness.

The New York Times also reported that Gen. Dan Caine, chairman of the Joint Chiefs of Staff, privately warned that restarting major combat operations was possible, but that Iran’s retaliation would force Central Command to draw down its interceptor stockpile to dangerously low levels.

The pause marks a sharp reversal from a week earlier, when Iranian attacks killed U.S. troops in Jordan and crossed Trump’s red line for resuming full-scale war. Reports last week said Trump had lost patience with the Islamic Republic and was in “revenge mode.” He ordered the pause on Friday.

While the U.S. now appears more constrained, Ukraine’s strike on an Iranian supply ship in the Caspian Sea has expanded the map of the conflict, raising speculation that it could be used as leverage in U.S.-Iran talks.

The Strait of Hormuz negotiations are unfolding as the Federal Reserve has sounded more hawkish on fighting inflation. Central bankers meet this week, and Wall Street expects another “family feud” as policymakers debate whether to raise rates or keep them unchanged.

The rate decision will also affect the AI trade, which has weakened recently as investors push back against heavy capital expenditures. Higher interest rates can weigh on long-duration growth stocks by making future earnings less valuable in present terms, adding another layer of scrutiny to companies funding large AI buildouts.

More updates on AI spending are expected when Microsoft and Meta report earnings on Wednesday, followed by Apple and Amazon on Thursday. Google parent Alphabet beat earnings estimates last week but reported negative cash flow amid heavy spending.

Demand for AI capacity remains robust. AI developer Anthropic has asked memory-chip giant SK Hynix for supplies to make its own semiconductors, according to SK Group Chairman Chey Tae Won.

Samsung Electronics also won a contract worth more than $200 billion to make chips for Broadcom, as the companies seek to expand in the AI infrastructure market.

Source: Fortune