Markets rally as US–Iran ceasefire eases oil fears

Global financial markets eased sharply following the announcement of a two-week ceasefire between the United States and Iran. The price of US crude oil fell by about 15 per cent to $96.31 per barrel, while Brent dropped by 13 per cent to $95.36.

Investors reacted primarily to hopes of a resumption of shipments through the Strait of Hormuz, a route through which about 20 per cent of the world’s oil and liquefied gas supplies pass.

Equity markets rallied strongly, with futures on the S&P 500 rising by more than two per cent. European markets and Japan’s Nikkei gained about five per cent, while South Korea’s Kospi rose six per cent, briefly triggering a trading halt.

The dollar weakened markedly, with its index, which measures its value against a basket of six major currencies, hovering around 98.9, close to a one-month low. The yield on the 10-year US Treasury note fell to 4.247 per cent.

Analysts cautioned that the move may prove temporary, as the conflict has not been definitively resolved. The key question, they said, is whether confidence can be restored among shipping companies and insurers. Some expect tensions to persist for several more months.

(reuters, pir)