The extension of the US-Iran ceasefire by President Donald Trump has been a focal point for global markets, with persistent tensions in the Strait of Hormuz continuing to drive volatility across asset classes. Despite the ceasefire extension, Iran’s Islamic Revolutionary Guard Corps (IRGC) seized two ships in the Strait of Hormuz, and reports indicate that attacks on vessels in this strategic waterway have not ceased, maintaining elevated geopolitical risks [1][2][4]. The US continues to enforce a naval blockade, and while Trump suggested talks with Iran could occur as soon as Friday, Tehran has not confirmed participation [1][3]. The ceasefire is widely viewed as a temporary pause, with key differences over nuclear and missile issues unresolved [1][3].
Currency markets reflected these developments. The Euro weakened against the US Dollar, with EUR/USD trading around 1.1712, extending losses for a second day as the US Dollar Index (DXY) hovered near a one-week high at 98.57 [1]. The US Dollar benefited from safe-haven flows, particularly against the Yen, with USD/JPY consolidating near 159.30 as Middle East tensions offset the impact of softer US Treasury yields [4]. The Australian Dollar, meanwhile, gained modestly, with AUD/USD trading around 0.7160, supported by improved risk sentiment and expectations of a Reserve Bank of Australia (RBA) rate hike due to oil-driven inflation risks [3].
Equity markets initially sold off on Hormuz headlines, with Dow Jones Industrial Average (DJIA) futures dropping roughly 750 points from Tuesday’s peak above 49,800 to an overnight low below 49,100, before rebounding to near 49,500 as risk appetite returned following the ceasefire extension [2]. The Nasdaq Composite reached a new intraday all-time high, closing up 1.3%, while the S&P 500 added 0.8%, erasing its Iran-related losses [2]. Strong Q1 earnings from Boeing (BA), which rose 5% on a smaller-than-expected loss, and GE Vernova (GEV), which surged 12% on revenue beats, helped underpin US equities [2]. Over 80% of S&P 500 companies have surpassed earnings expectations, according to FactSet data [2].
Oil prices remained elevated, with Brent crude futures rising over 2% to around $101 per barrel and US WTI futures gaining 2% to near $92, reflecting ongoing supply risks from the region [2][3]. The surge in oil prices has kept inflation risks in focus, shaping expectations for central bank policy in both the US and Australia [1][3]. In the Eurozone, preliminary Consumer Confidence for April fell to -20.6 from -16.3, its lowest in over three years, highlighting the economic impact of higher energy prices and geopolitical uncertainty [1].
Looking ahead, markets are watching for further developments in US-Iran negotiations, as well as upcoming economic data such as US Initial Jobless Claims and PMI readings, which could influence monetary policy expectations [2][3]. Fed Chair nominee Kevin Warsh emphasized the independence of monetary policy, and a Reuters poll suggests the Fed may keep rates steady through September, though a majority of economists expect at least one cut by year-end [3]. In Japan, the Bank of Japan remains cautious, delaying expectations for rate hikes and supporting USD/JPY at elevated levels [4].
CONCLUSION
The extension of the US-Iran ceasefire has provided only temporary relief to markets, as persistent tensions in the Strait of Hormuz continue to drive volatility in currencies, equities, and commodities. While strong US corporate earnings and central bank expectations have helped stabilize risk sentiment, ongoing geopolitical uncertainty and elevated oil prices remain key risks for the near term.