Oil prices tumbles, bonds recovered, while stocks surged on Wednesday after US President Donald Trump announced a two-week ceasefire in the Middle East.
The abrupt move prompted a rebound in the markets as investors welcomed the potential resumption of oil and gas shipping via the strategic Strait of Hormuz.
Trump said that Washington has agreed to suspend planned military strikes on Iran for two weeks and that negotiations between both sides were in progress. Global markets have experienced turbulence since the United States and Israel attacked Iran at the end of February, prompting Tehran to effectively close the crucial international waterway, the Strait of Hormuz, used to transit one-fifth of the world's oil and gas.
Markets rally as futures surge and crude plunges, following Trump's ceasefire announcement
Dow Jones Industrial Average futures surged 967 points, and Nasdaq 100 futures climbed 2.3%. Meanwhile, West Texas Intermediate crude fell roughly 18% to below $93 a barrel following Trump's announcement.
U.S. crude futures dropped nearly 16.5 percent to $94 a barrel, S&P 500 futures leapt over 2 percent, while the dollar declined widely, traditionally the haven for investors during the tumult, Reuters reported. Meanwhile, the Australian dollar jumped 1.3 percent to over $0.7070, and the euro rose 0.76 percent to $1.1683. Cryptocurrencies also saw a jump.
Middle East conflict drives global market turbulence
As the clock ticked toward Trump's 8 p.m. EDT deadline, attacks intensified on Iran, targeting railway, road bridges, a petrochemical facility, and an airport. US-Israeli forces also struck sites on Kharg Island, the main oil export hub in Iran.
In response, Iran signaled escalation, stating it would not hold back from hitting key infrastructure in Gulf states. It also claimed fresh attacks on a major Saudi petrochemical complex and on a vessel in the Gulf. Blasts were also heard in Doha late Tuesday, Reuters reported.
The war, which has now entered its sixth week, has sent oil prices surging, fueled inflation fears, and disrupted global interest rates outlook with countries and companies scrambling to adapt to the energy crisis.