Oiland stocks surged in international markets following US President Donald Trump’s announcement of a two-week ceasefire with Iran, a development that immediately signaled de-escalation to investors. Oil prices dropped below $100 per barrel, while stocks posted strong gains as the market reacted to the prospect of resuming oil and gas flows through the Strait of Hormuz. Relief was evident across all trading floors, from Europe to Asia and Wall Street futures, as the scenario of further escalation that would directly threaten global growth and energy costs appeared to recede, at least temporarily. The ceasefire announcement came just under two hours before the expiration of Trump’s ultimatum to Iran to reopen the Strait of Hormuz, an element that added even greater intensity to the market reaction.
Oil: immediate reaction in Europe, Asia and Wall Street
The initial picture from international markets was clearly positive for stocks. European stocks rose 4%, following strong gains in Asian markets, while Wall Street futures showed an opening with gains from 2.7% to 3.5%. The pan-European STOXX 600 index strengthened earlier by 3.6% and moved toward its largest daily jump in a year, if this momentum is maintained. At the same time, Germany’s DAX recorded a 4.7% rise, while Britain’s FTSE 100 strengthened by 2.5%, showing that the reaction was not limited to just one sector or one market.
The signal sent by investors was clear. Initially, they preferred to price in the avoidance of the worst-case scenario. Nabil Milali, portfolio manager at Edmond de Rothschild, noted that “It’s tremendous relief to see that finally we have a ceasefire between the US and Iran,” adding that he believes Trump had calculated that further escalation would backfire. This phrase captures exactly the sentiment that dominated the markets, namely that de-escalation was the only solution that could stabilize the environment, even temporarily.
Oil: price plunge and caution about what comes next
In energy markets, the reaction was even more dramatic. Brent crude fell below $100 per barrel, with futures contracts down 16% at $91.80. Similarly, US crude futures recorded an 18% drop to $92.62 per barrel. The market obviously rushed to price in that the ceasefire would allow the normalization of energy flows from the planet’s most critical sea passage. Matt Simpson, senior analyst at StoneX, aptly commented that “Markets can deal with the complex details later. For now, they have the green light to rally.”
Despite this clear relief, the picture is not completely cloudless. Investors are waiting to see whether the ceasefire will actually lead to a broader resolution of the crisis or if it’s simply a short-term pause. Martin Whetton, head of financial markets strategy at Westpac, captured this caution, saying: “Does this mean the world will take on new risks? No, it doesn’t mean that.” He added: “There needs to be a lasting peace for things to change. The world isn’t actually taking on risk.”
Meanwhile, gold moved up 1.7% to $4,783 per ounce, confirming that part of the market continues to seek safety. On the currency front, the dollar fell to its lowest level in a month against a basket of currencies. The euro strengthened 0.9% to $1.1698, at its highest level since early March, the pound rose 1% to $1.3428, while the US currency lost nearly 1% against the yen at 158.12. In parallel, in the bond market, the yield on the US 10-year bond fell to 4.2438%, the lowest since mid-March, while the yield on the German 10-year bond moved earlier to 2.92%. The overall picture shows relief, but not a complete return to normalcy.
