Global stock markets, including U.S. stock index futures, surged on Wednesday following reports of a two-week ceasefire agreement between the U.S. and Iran.
U.S. President Donald Trump announced a two-week suspension of strikes against Iran in exchange for the full and immediate reopening of the Strait of Hormuz. He noted that Iran would also suspend its strikes. “This will be a bilateral ceasefire,” the U.S. president emphasized. Iran’s Supreme National Security Council confirmed its agreement to a ceasefire with the U.S., according to Abbas Arakchi, the Islamic Republic’s foreign minister.
On this news, futures on U.S. stock indices are rising by more than 2%. As of 8:51 a.m., the Dow Jones futures index rose by 2.4%, S&P 500 futures rose by 2.7%, while Nasdaq 100 futures jumped by 3.3%.
The MSCI Asia Pacific Index, a composite stock index for the Asia-Pacific region, soared by more than 5%.
Amid expectations of increased Middle Eastern fuel supplies to the global market, June Brent futures had plummeted 14.3% to $93.69 per barrel by 8:52 a.m., while May WTI fell 15.3% to $95.71 per barrel.
Meanwhile, the DXY dollar index, which tracks the dollar’s performance against six major global currencies, is down 1.17%. Analysts believe that cheaper oil, should a long-term peace be established in the Middle East, would exert less upward pressure on inflation and allow the Federal Reserve to continue its course of gradually lowering interest rates.
Amid expectations of a more dovish monetary policy in the U.S. than previously anticipated, the yield on 10-year U.S. Treasuries fell by 5.5 basis points during trading to 4.245%.
The general trend in global markets on Wednesday is rising demand for risky assets and selling of so-called “safe-haven assets” amid signs of easing geopolitical tensions. Gold proved to be a notable exception—the precious metal is rising in price amid a falling dollar, as the weak U.S. currency boosts gold’s investment appeal.
Gold futures are up 3.8% and trading near $4,864 per troy ounce.
