Oil prices plummeted more than $16 a barrel and Asian stock markets surged after the United States and Iran agreed a two-week ceasefire that could reopen the Strait of Hormuz. South Korea’s Kospi rose about 5.8 per cent, while Japan’s Nikkei 225 climbed roughly 5 per cent.
Australia’s S&P/ASX 200 advanced around 2.6 per cent, and Hong Kong’s Hang Seng rose about 2.6 per cent as trading resumed after a holiday. China’s CSI 300 also moved higher. US crude futures fell more than 15 per cent, while S&P 500 futures jumped 2.2 per cent and Dow futures rose 930 points, or 2 per cent.
US President Donald Trump announced he would hold off on his threat of devastating attacks on Iran, subject to Iran agreeing to the complete, immediate and safe opening of the Strait of Hormuz. Iranian Foreign Minister Seyed Abbas Araghchi said armed forces would cease defensive operations, though added this does not signify the end of the war and that forces would remain on alert.
Analysts described the mood as cautious optimism rather than outright celebration. Tim Waterer of KCM Trade noted the ceasefire was temporary and its impact on shipping flows would be closely watched. Charu Chanana of Saxo said the crucial test was whether negotiations would continue and whether traffic through Hormuz would actually ease.
Oil prices had earlier spiked above $117 a barrel before settling at $112.95, as the war disrupted production and transportation in the Persian Gulf. The average US petrol price leapt to $4.14 a gallon. Bond yields eased, with the 10-year Treasury yield falling to 4.24 per cent from 4.30 per cent, though still above pre-war levels.
