Wall Street surged in premarket trading as oil prices plunged below $100 following an agreement for a two-week ceasefire between the U.S. and Iran, which includes the reopening of the Strait of Hormuz.
Futures for the S&P 500 jumped 2.7 per cent, Dow Jones Industrial Average futures climbed 2.6 per cent, and Nasdaq futures soared 3.4 per cent.
Benchmark U.S. crude sank nearly 16 per cent to $94.52 a barrel, with Brent crude dropping to $93.73. Natural gas futures declined close to five per cent.
Market analysts view the ceasefire as a reprieve rather than a resolution, with caution regarding its two-week duration and the potential for a more durable peace.
U.S. Treasury yields fell as the drop in oil prices eased inflation concerns. Major U.S. airline stocks soared on the steep oil price decline, with Delta and United jumping over 12 per cent in premarket trading.
Energy sector companies fell, with Exxon Mobil and ConocoPhillips losing close to six per cent, and Chevron tumbling 4.6 per cent.
European markets also saw significant gains, with France’s CAC 40 adding 4.5 per cent and Germany’s DAX soaring nearly five per cent. Asian markets, including Japan’s Nikkei 225 and South Korea’s Kospi, also posted strong gains.
The U.S. dollar fell against the Japanese yen and the euro, as the ceasefire deal reduced its appeal as a safe haven during geopolitical uncertainty.