Global financial markets experienced a significant surge, with oil prices plunging, following an agreement for a temporary ceasefire between the United States and Iran. This development raises hopes for the reopening of the Strait of Hormuz.
Oil contracts saw a drop of approximately 15 percent, settling around $95 a barrel after a period of conflict. Stock markets on Wall Street and major European exchanges posted gains exceeding three percent, with Tokyo and Chinese indices also climbing. The US dollar weakened against major currencies as investors shifted to riskier assets.
However, experts warn that the market euphoria may be temporary. The current pause is seen as a window for negotiation, with the potential for renewed hostilities if an agreement isn't reached within two weeks. Analysts note that oil prices and equity values remain elevated and depressed, respectively, compared to pre-conflict levels, with significant damage to energy infrastructure in the Gulf.
Mining groups, banks, and airlines were among the strongest performers on equity markets. Conversely, energy majors like Shell, BP, and TotalEnergies saw declines despite reporting strong earnings bolstered by higher oil prices.