US President Donald Trump announced a two-week suspension of planned military strikes against Iran, conditional on Iran agreeing to the complete, immediate, and safe reopening of the Strait of Hormuz. This agreement was brokered with the help of Pakistan's Prime Minister Shehbaz Sharif, and Israel has also agreed to the ceasefire. Iran's Foreign Minister Abbas Araghchi confirmed that safe passage through the Strait of Hormuz would be possible for two weeks, provided attacks against Iran cease. Negotiations to finalize the details are set to begin in Islamabad, Pakistan, with the possibility of extension if both sides agree [1][3][4][7][9][11].
The ceasefire triggered a dramatic reaction in global markets. Oil prices, which had surged amid the conflict, plummeted sharply. West Texas Intermediate (WTI) crude oil fell from above $106 to below $90 per barrel, marking a drop of over 16% to $94.23 for May delivery, its sharpest intraday decline since the conflict began [2][3][4][5][6][9][10][11]. The selloff in oil was anticipated by traders, as this was the fourth time Trump extended a deadline with Iran, and previous extensions had led to similar market reactions [4][8]. Technical analysts noted that oil prices retreated toward key support levels, and market sentiment turned bearish as the risk premium evaporated [8][9][10].
The risk-on shift fueled rallies in global equities and risk-sensitive currencies. S&P 500 futures jumped over 1%, Nasdaq futures climbed 1.2-1.7%, and Dow Jones futures rose by 718 points, or 1.5%. Asia-Pacific markets responded strongly: South Korea's Kospi surged 5.99%, Kosdaq nearly 5%, Japan's Nikkei 225 rose 1.79%, Topix 1.69%, and Australia's S&P/ASX 200 gained 2.8%. Hong Kong's Hang Seng Index futures also pointed higher [2][4][5][6][11].
Currency markets reflected the unwinding of safe-haven trades. The US Dollar Index (DXY) slid toward 100.00, while GBP/USD, EUR/USD, and AUD/USD all surged, with the Pound and Euro rallying primarily on Dollar weakness rather than domestic strength. USD/JPY reversed sharply from a session high of 160.50 to below 159.00, as the Yen benefited from lower oil prices and reduced safe-haven demand [2][5][6][7]. Gold prices rose to near $4,815 as investors sought safety amid ongoing uncertainty, though the metal's appeal is tempered by high interest rates [1].
Analysts and market participants cautioned that while the ceasefire has eased immediate fears of supply disruption and inflation, the situation remains fluid. Iran has previously rejected temporary ceasefires and continues to demand a permanent end to hostilities and sanctions relief. The market is watching for confirmation that physical shipping resumes through the Strait of Hormuz, as failure to do so could quickly rebuild the oil risk premium and reverse the risk-on sentiment. Central banks, including the Bank of England, Bank of Japan, and Reserve Bank of Australia, may adjust their policy outlooks if energy prices remain subdued, but uncertainty persists given the history of failed diplomatic breakthroughs in this conflict [2][4][5][6][7][11].
Upcoming events that could further influence markets include the release of the Federal Reserve's March meeting minutes and key economic data such as the Japanese Producer Price Index and US Durable Goods Orders [1][5][6][7].
CONCLUSION
The two-week ceasefire between the US and Iran has triggered a sharp drop in oil prices and a broad rally in global equities and risk-sensitive currencies, as immediate geopolitical risks recede. However, markets remain cautious, with traders seeking confirmation of resumed shipping through the Strait of Hormuz and wary of the potential for renewed volatility if diplomacy falters. Central banks may gain room to ease policy if energy prices stay low, but the situation remains highly dynamic.