Oil slumps, stocks jump on US-Iran ceasefire plan

Oil fell the most in almost six years and stocks surged after the US and Iran agreed to a two-week ceasefire, giving markets a respite from the turbulence driven by the Middle East conflict.

West Texas Intermediate tumbled as much as 19% after President Donald Trump agreed to suspend the bombing of Iran in a move that will help restore oil flows through the Strait of Hormuz. Iran said safe passage through the waterway will be possible during that period. Global benchmark Brent crude slid 13% to about $95 per barrel.

Read: The next economic battle is not about oil …
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MSCI’s Asia Pacific equity index jumped 4.5% to a three-week high as traders bet lower oil prices will help contain inflation and revive economic growth. Stock-index futures for Wall Street gauges rose more than 2% and European contracts surged 5%. Treasuries rallied as easing price pressures encouraged traders to revive bets on Federal Reserve interest-rate cuts. A gauge of the dollar, which emerged as the haven of choice during the conflict, fell 0.7%, while gold rose.

The ceasefire proposal – announced just hours before a Trump deadline to escalate bombing of Iran — is reviving risk sentiment after turmoil that drove stocks lower and pushed several gauges into correction territory since the Middle East war began six weeks ago. For the cross-asset relief rally to hold, traders will need confirmation that the ceasefire will last and energy flows through the Strait of Hormuz normalise, analysts said.

Oil Slides Back Toward $90 a Barrel

“For the time being, this is a relief for markets — things have calmed down,” said Hiroyuki Ueno, chief strategist at Sumitomo Mitsui Trust Asset Management in Tokyo. “But things are not guaranteed to go smoothly from here, and investors shouldn’t get ahead of themselves.”

Trump announced the agreement hours after Pakistan, a mediator in talks, implored the US leader to back off his deadline to unleash massive devastation on Iran. The deal buys time for the two sides to reach a longer agreement to end the war, which has killed thousands of people and sparked a global energy crisis.

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Trump’s decision represents a dramatic climb-down from a bellicose social media post earlier Tuesday, in which he warned “a whole civilisation will die tonight, never to be brought back again” if Iran didn’t give in.

“It’s a good result considering the alternatives, as it shows a willingness to get something done,” said Matthew Haupt, a fund manager at Wilson Asset Management in Sydney. “This is also showing promising signs that we’ve dodged the worst-case scenario.”

Some investors remained sceptical.

“The outlook depends on whether the ceasefire holds, and at the moment I have little confidence that it will,” said Neil Newman, head of strategy at Astris Advisory Japan. “So I view this as very fragile relief. I would recommend using the volatility to exit underperforming stocks and strategically build positions.”

A key test for investors will be whether oil and gas flows through the Strait of Hormuz remain uninterrupted. Safe passage through the waterway will be possible via coordination with Iran’s armed forces and with “due consideration of technical limitations,” Iranian Foreign Minister Abbas Araghchi said in a post on X.

Read: Trump reiterates threat to destroy Iran as deadline nears

Shipowners are scrambling to understand the fine print in the ceasefire, hoping to take advantage of a potential window to extract more than 800 vessels trapped in the Persian Gulf.

What Bloomberg Strategists Say…

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“The capacity for these initial knee-jerk gains to extend is going to depend on whether the attacks will indeed fade away and on the course of the talks assuming they go ahead from Friday in Islamabad.” – Garfield Reynolds, Markets Live team leader.

Elsewhere, gold jumped 2% to about $4,800 an ounce as bullion — a non-yielding asset — typically benefits in a lower interest-rate scenario. Silver surged 4.5% to over $76 an ounce.

The cost of insuring Asian investment-grade debt against default fell by at least six basis points, traders said, while China’s yuan advanced to a three-year high.

The Treasury yield curve steepened as a slump in oil prices fueled bets that slower inflation will pave the way for the Fed to cut rates. Policy sensitive two-year yields dropped six basis points to 3.73%, while their 10-year counterparts fell five basis points to 4.24%.

Overnight-indexed swaps signalled a 60% likelihood of a Fed rate cut by the year-end, compared with almost no chance seen at the start of this week. They had priced in more than two rate reductions before the US and Israel attacked Iran in late February.

“There’s room for more bull steepening” in the near term, said Ken Crompton, head of rates strategy at National Australia Bank Ltd. “The market could readjust toward a slightly greater chance of FOMC cuts than currently priced.”

Wall Street traders have been on edge, hanging on every development in the Middle East and the often unpredictable missives of Trump.

One technical metric, the daily turnover in the State Street SPDR S&P 500 ETF Trust, has breached $60 billion — a reading seen as a “freak out” indicator by Bloomberg Intelligence strategists — 29 times this year. That new record compares to 28 times in all of 2025, according to BI’s Athanasios Psarofagis.

“Be aware that we can still see more volatility on any fresh headline,” said Nick Twidale, chief market analyst at AT Global Markets. “These are big moves in markets which should promote further volatility today.”

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Some of the main moves in markets:

Stocks

S&P 500 futures rose 2.3% as of 12:50 p.m. Tokyo time
Nikkei 225 futures (OSE) rose 4.9%
Japan’s Topix rose 3.1%
Australia’s S&P/ASX 200 rose 2.6%
Hong Kong’s Hang Seng rose 2.9%
The Shanghai Composite rose 1.9%
Euro Stoxx 50 futures rose 5.1%

Currencies

The Bloomberg Dollar Spot Index fell 0.7%
The euro rose 0.7% to $1.1671
The Japanese yen rose 0.8% to 158.38 per dollar
The offshore yuan rose 0.3% to 6.8325 per dollar

Cryptocurrencies

Bitcoin rose 2.9% to $71 298.52
Ether rose 5.6% to $2 234.02

Bonds

The yield on 10-year Treasuries declined five basis points to 4.24%
Japan’s 10-year yield declined four basis points to 2.365%
Australia’s 10-year yield declined nine basis points to 4.89%

Commodities

West Texas Intermediate crude fell 15% to $96.19 a barrel
Spot gold rose 2% to $4,799.54 an ounce

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