LONDON/SYDNEY - Share markets and bonds rallied hard on Monday and oil prices tumbled 5% as a framework peace deal between the US and Iran promised to ease inflationary pressures globally and lessen the need for higher interest rates.

Europe's early optimism drove both the STOXX 600 and FTSE Eurofirst to records. Asia's biggest markets had all leapt overnight, while futures markets pointed to gains of 1.3% to 2% for Wall Street later.

Early on Monday, Pakistani Prime Minister Shehbaz ​Sharif said on social media an Iranian peace deal had been struck, while President Donald Trump said the pact included opening the vital Strait of Hormuz, though without giving details.

Trump will meet Middle Eastern leaders and attend a working session with Ukrainian President Volodymyr Zelenskiy during a G7 summit in France this week.

Iran said traffic through the strait would be regulated by it and Oman, a potential blow to the rules of free trade that suggests there might be a toll of some kind on transits.

Saxo Bank strategist John Hardy said the peace deal was "about as supportive as you can get" for markets, especially after the excitement triggered by the recent record-breaking $75 billion SpaceX initial public offering.

"What do you add on from here to get sentiment even bubblier?" Hardy questioned.

The news will be a relief for the crowd of central banks meeting this week, easing some pressure to tighten policy to head off an energy-driven rise in inflationary expectations.

Markets had already priced in a likely deal but the confirmation was enough to send down Brent crude 5%, to stand at $83 a barrel, well off its May peak of $126.41, albeit still above the $67 where it traded before the war began in late February.

"We see Brent oil futures falling to $80 by the end of the year, assuming the strait does not close again," said Vivek Dhar, a mining and energy analyst at CBA.

"Our forecast implicitly assumes that oil and refined product exports can resume quickly through the Strait of Hormuz, but this view carries considerable uncertainty tied to the damage to oil and refinery assets."

The prospect of cheaper oil will be a boon to Japan which is a net importer of energy.

Overnight the Nikkei had surged 5%. South Korea's red-hot market gained 5.2%, and Chinese blue chips firmed 1.4%. MSCI's broadest index of Asia-Pacific shares outside Japan rose 2.4%.