Global financial markets surged following the announcement of a two-week ceasefire agreement between the United States and Iran, with significant impacts across equities, currencies, and commodities. US President Donald Trump stated on Truth Social that he would suspend planned military strikes against Iran for two weeks, contingent on Iran's agreement to a 'complete, immediate, and safe opening of the Strait of Hormuz' [1][3][4]. Iran's Foreign Minister Seyed Abbas Araghchi confirmed that Iran accepted the ceasefire and would allow safe passage through the Strait for two weeks, with negotiations set to begin on Friday in Islamabad, Pakistan [3][4].
The ceasefire news triggered a strong risk-on rally in global markets. Asian equity indices, including Japan’s Nikkei 225 and South Korea’s Kospi, jumped over 5% intraday, while European markets were set to open sharply higher: the UK's FTSE 100 up 3%, Germany's DAX 5%, France's CAC 40 4.5%, and Italy's FTSE MIB 5.3%, according to IG data [3][4]. US stock futures also rose on the news [4].
Commodities responded sharply, with crude oil prices plunging over 10% and West Texas Intermediate (WTI) trading around $89.80 per barrel, down by more than 11% at the time of reporting [2][3]. The drop in oil prices was attributed to easing supply fears after the ceasefire and Iran's agreement to reopen the Strait of Hormuz [2][3][4]. This decline in oil prices helped ease inflation concerns and tempered expectations for more hawkish stances by major central banks [3].
Currency markets reflected the improved risk sentiment. The EUR/GBP cross edged lower to near 0.8700, as the ceasefire boosted the Pound Sterling over the Euro, though the downside was cushioned by the European Central Bank's hawkish stance [1]. The Canadian Dollar gained as risk-on sentiment prevailed, though its upside was limited by lower oil prices, given Canada's status as a major crude exporter [2].
Despite the ceasefire, some Middle Eastern countries continued to report incoming missiles and drones from Iran on Wednesday, triggering air defenses across the Gulf, according to [4]. Market participants are now turning their attention to upcoming economic data releases, including the FOMC Minutes, US PCE Price Index, US CPI, German factory orders, and EU retail sales, for further direction [1][3][4].
Forward-looking statements from the sources indicate that the risk-on rally is expected to persist, supported by easing geopolitical tensions and falling oil prices, though investors remain cautious and are closely monitoring further developments and economic data [3][4].
CONCLUSION
The US-Iran ceasefire has sparked a broad-based rally in global equities and a sharp decline in oil prices, reflecting improved risk sentiment. While the ceasefire has eased immediate geopolitical concerns, ongoing reports of regional hostilities and upcoming economic data releases remain in focus. Markets are likely to stay buoyant in the short term, but investors are watching for further developments.