Optimism grows for a US-Iran peace deal following the "Islamabad Memorandum." We analyze how a potential agreement—or its collapse—could impact S&P 500, Nasdaq, and oil futures market volatility.
Markets are heading into what could be a pivotal weekend. The US-Iran appear to finally be making significant strides toward a peace deal.
Iranian Foreign Minister Abbas Araghchi announced in a post on X that the "Islamabad Memorandum of Understanding"—a preliminary peace agreement addressing the ongoing conflict between Iran, the United States, and Israel has "never been closer" to finalization.
Amidst swirling rumors and leaked drafts regarding the potential deal's terms, Araghchi strongly urged the media to refrain from speculating about the contents of the agreement until negotiations officially conclude.
He assured the public that the Iranian government is maintaining a responsible and transparent approach, and that all details of the agreement will be fully shared with the public once the review and decision-making processes are complete.
This was followed by US President Donald Trump who shared the Tweet on his TruthSocial account.
Source: TruthSocial
Furthermore, Pakistani Prime Minister Shehbaz Sharif addressed the intense, ongoing mediation efforts led by Pakistan regarding the pending peace agreement. He acknowledged being fully aware of an "incessant misinformation campaign" actively being waged by those attempting to sabotage the deal.
Setting aside this noise, Sharif officially confirmed that a final, agreed-upon text for the peace agreement has been reached. He added that Pakistan is currently working closely with all sides to finalize the next steps, emphatically declaring that "peace has never been this close as it is now."
Source: X.com
Lastly, according to Axios reporter Barak Ravid, Donald Trump shared that he remains optimistic about an agreement with Iran being finalized over the upcoming weekend or by Monday.
What Does a US-Iran Deal Mean for Markets
Many realists may say that until a deal is signed there is no need to get hyped. This would be valid given the relationship between the US-Iran as well as a history of broken promises.
However, as market participants we need to be prepared for any eventuality, and this includes the possibility that a deal may be signed over the weekend. If not, there is implications involved as well even if that may prove to be a short-lived move.
Firstly, it is important to note that markets are still sensitive to any changes or tweets from either side and this could persist over the weekend. Now while markets have become somewhat accustomed to gap risk over the weekend, this weekend could be one where the risk is higher than normal given the current optimism.
Let us take a look at how a potential deal signing could impact US Index and Oil Futures.
How Will the US Equity Futures (ES, NQ) and Oil React?
S&P 500, Nasdaq 100
Deal signed: S&P (ES) and the Nasdaq (NQ) likely gap higher Sunday night. Crude's slide cools the inflation impulse, unwinds Fed rate-hike repricing, and pulls yields lower, a tailwind that favors NQ over ES, since rate-sensitive megacap tech leads relief rallies. Indexes have already front-run this with the rally on de-escalation hopes, so some upside is priced in, expect a pop, then fade risk.
Deal collapses: Mirror image, but sharper. Crude spikes, yields back up, and the peace premium evaporates into an illiquid Sunday open. NQ underperforms ES on the way down, and Friday's rally becomes trapped longs' stop-run fuel.
S&P 500 Four-Hour Chart, June 12, 2026
Source: TradingView
Oil Price Scenarios
Deal signed: Oil gaps lower at Sunday's reopen, the Hormuz premium that's propped Oil above $85 evaporates on confirmed signing language. First test is $80; a clean break opens the high-$70s. The structural overhang matters too: sanctions relief eventually returns Iranian barrels to a market already digesting soft Chinese imports. Rallies get sold.
Oil Futures (CL1!) Four-Hour Chart, June 12, 2026
Source: TradingView
Deal collapses: Violent gap higher. With crude below its key daily moving averages for the first time since January, shorts pressed into Friday's close are offside instantly, a snap back above $88–90 is plausible, faster if strikes resume near the Strait. Thin Sunday liquidity amplifies both directions.