Global financial markets surged on Wednesday after a two-week ceasefire in the Middle East raised hopes of stabilised energy flows through the Strait of Hormuz, a critical chokepoint for global oil and gas supplies. The agreement helped ease investor concerns that had intensified following weeks of conflict involving strikes on Iran and disruptions to maritime routes.
Oil prices fell sharply, with both US crude and Brent futures declining by double digits, as expectations grew that energy shipments could resume through the Strait of Hormuz, which accounts for roughly one-fifth of global energy trade. The ceasefire was reportedly reached shortly before a deadline issued by former US President Donald Trump, who had warned of severe consequences if Iran did not reopen the waterway.
Equity markets responded positively, with futures across the US and Europe rising, while Asian indices also recorded significant gains. At the same time, government bonds rallied, pushing yields lower, and the US dollar weakened as investors moved away from safe-haven assets amid reduced geopolitical risk. Gold prices also rose, reflecting continued caution among investors despite the relief rally.
Analysts cautioned that while markets welcomed the temporary de-escalation, uncertainty remains over whether the ceasefire will lead to a durable peace. Central banks and policymakers continue to monitor the situation closely as energy price volatility and inflationary pressures remain key concerns in the global economic outlook.