Introduction: Oil prices plunge below $100, stocks surge and dollar slumps after US-Iran ceasefire
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Oil prices fell below $100 a barrel, Asian stocks surged, and the dollar declined after the US and Iran agreed to a two-week conditional ceasefire on Tuesday evening, which included a temporary reopening of the Strait of Hormuz.
Investors expressed relief, with Brent crude, the global oil benchmark, dropping by more than $15 to $93.82 a barrel in early London trading. It reached a low of $91.7 a barrel during Asian trading but remains significantly higher than the approximately $72 per barrel price seen before the US and Israel launched attacks on Tehran on 28 February.
Japan’s benchmark Nikkei 225 rose 5.45%, the Australian market increased by 2.55%, and South Korea’s Kospi surged 7.7%. In other markets, Hong Kong’s Hang Seng climbed 3%, while China’s Shenzhen Composite gained just over 4%.
European stock futures indicate a strong rally at market open, with Germany’s Dax expected to rise more than 5% and the UK’s FTSE 100 nearly 3% higher.
The US dollar fell more than 1% against a basket of major currencies, while spot gold increased 2.6% to $4,825 an ounce.
Following a last-minute diplomatic intervention led by Pakistan, US President Donald Trump refrained from his earlier threats to bomb Iran “back to the stone ages,” which he had escalated to stating “a whole civilization will die tonight” on Tuesday.
With less than two hours remaining before his 8pm Eastern Time ultimatum, Trump announced that a ceasefire agreement had been mediated through Pakistan. Pakistan’s Prime Minister, Shehbaz Sharif, had requested the two-week peace to “allow diplomacy to run its course.”
Trump posted that:
"Subject to the Islamic Republic of Iran agreeing to the COMPLETE, IMMEDIATE, and SAFE OPENING of the Strait of Hormuz, I agree to suspend the bombing and attack of Iran for a period of two weeks."
Shortly after, Iran’s National Security Council confirmed it had placed the Strait of Hormuz under military management if attacks against Iran ceased. Tehran also announced that peace negotiations with the US would commence in Islamabad on Friday.
Despite the ceasefire, significant uncertainty remains regarding the outcome of the talks, the management of the Strait of Hormuz, and the status of shipping after the two-week period ends.
Market Analyst Perspectives
Jim Reid, markets analyst at Deutsche Bank, commented:
"Investors will be breathing a big sigh of relief that an offramp out of the war is being taken even as there’ll be various elements to watch to see whether this leads to sustained de-escalation.
Will the ceasefire hold? We saw some strikes by Israel and Iran overnight though these may have been in the works before the conditional ceasefire. We’ve also seen conflicting commentary on whether the ceasefire will extend to Israel’s action in Lebanon. Can talks lead to a permanent cessation of hostilities?
Trump’s comment last night that ‘Almost all of the various points of past contention have been agreed to’ suggests a lower bar for agreement, but Iran’s reported 10-point plan includes elements such as the lifting of all sanctions and Iran controlling the Strait of Hormuz that have previously been unacceptable to the US and allies.
Those points also do not restrict Iran’s enriched uranium, which Trump suggested would be ‘perfectly taken care of’ as he claimed a ‘total and complete victory’ in an interview to AFP late last night. And in his latest post overnight, Trump appeared keen to lean into the prospects for full resolution, claiming ‘a big day for World Peace’ and that the US ‘will be helping with the traffic buildup in the Strait of Hormuz.’"
Charu Chanana, chief investment strategist at Saxo Bank in Singapore, added:
"Markets were positioned for a much worse outcome, so the relief rally in equities, FX, and oil makes sense. This is the market unwinding some of its disaster hedges.
The ceasefire does not resolve all the underlying risks. Investors still need clarity on whether hostilities truly stop, whether Hormuz remains reliably open, how quickly disrupted energy supply can recover, and whether the 10 April talks in Islamabad produce real progress.
For macro and rates, the worst immediate inflation shock has eased, so markets can start to put some rate cuts back on the table. But I would not assume they simply return to the exact same pricing as before the war, because shipping, insurance, and supply-chain disruptions may take longer to normalize.
Tactically, the Iran playbook may now be flipping. Relief-sensitive areas such as airlines, consumer discretionary, selected cyclicals, and broader risk assets could benefit if de-escalation holds. Structurally though, I still think investors should balance growth and AI exposure with energy, supply-chain resilience, hard assets, and national-security themes."
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