The ceasefire raised hopes of restoring critical energy flows, which had been disrupted during weeks of conflict that pushed oil higher and rattled global markets.
Oil prices dived, stocks
surged and the dollar was knocked back on Wednesday as a
two-week Middle East ceasefire sparked a relief rally, fuelled
by hopes that oil and gas flows through the Strait of Hormuz
could resume.
The news capped weeks of financial market volatility and
geopolitical upheaval after U.S. and Israeli strikes on Iran
late February pushed tensions to the brink, with Tehran
effectively choking off the strategic waterway that carries
about 20% of the world’s oil and gas.
U.S. President Donald Trump on Tuesday agreed to a ceasefire
with Iran, less than two hours before his deadline for Tehran to
reopen the strait or face devastating attacks on its civilian
infrastructure.
Market reaction was swift and dramatic, with U.S. crude
futures down around 16% to $94.59 a barrel, while Brent
futures also slid 15% to $92.35 per barrel.
S&P 500 futures leapt over 2%, while European futures
jumped over 4%. The U.S. dollar fell broadly, having
been the haven of choice during the tumult.
In Asia, Japan’s Nikkei surged about 5% while South
Korea’s Kospi rose 6%, triggering a halt in trading.
That left the MSCI’s broadest index of Asia-Pacific shares
outside Japan up 4%.
Beyond the immediate relief, investors remain keen to see
whether the ceasefire leads to a broader resolution before
placing major bets.
“Does it mean people are going to take new risks? No, it
doesn’t,” said Martin Whetton, head of financial markets
strategy at Westpac. “It would have to actually be a lasting
peace (to change things). People aren’t actually taking risk.”
The six-week conflict has sent oil prices soaring, reignited
inflation fears and thrown the global rates outlook into
disarray, forcing governments and companies to scramble for
cover against a sudden energy shock.
Trump’s social media announcement marked an abrupt reversal
from hours earlier, when he issued an extraordinary warning that
“a whole civilization will die tonight” unless his demands were
met.
Charu Chanana, chief investment strategist at Saxo, said the
pivotal test is whether negotiations keep progressing over the
next two weeks – and whether insurers and tanker operators
regain enough confidence for traffic through Hormuz to run
normally again.
“That will determine whether this remains just a relief
rally or starts to look more like a durable de-escalation.”
The yield on the benchmark U.S. 10-year Treasury note
fell 7.9 basis points to 4.261%, its lowest since
mid-March. The yield on U.S. 2-year Treasury note
sank 10 bps to 3.727%.
Gold prices rose over 2% to $4,812 per ounce.
In currencies, the risk-sensitive Australian dollar
rose 1.3% to above $0.7070 and the euro gained 0.76% to
$1.1683. That left the dollar index at 99.047, hovering
near a one month low.
Some analysts remain sceptical that the ceasefire will
translate into lasting peace, warning of likely twists and turns
ahead.
Carol Kong, a currency strategist at Commonwealth Bank of
Australia, said the conflict’s root causes remain unresolved,
keeping the risk of re-escalation firmly on the table.
“We maintain our view that the war will run into June. The
implication is dollar losses may prove short-lived.”
Published on April 8, 2026
