Oil Tumbles, Stocks Surge as Markets Greet U.S.-Iran Cease-Fire with Optimism

By Dow Jones Newswires Staff

Oil tumbled and stocks surged in relief as markets welcomed a two-week cease-fire agreement between the U.S. and Iran.

Front-month Brent crude fell below $100 a barrel after President Trump said the U.S. agreed to suspend attacks against Iran on the condition that Tehran re-opens the Strait of Hormuz.

Investors bought up U.S. Treasurys and the dollar fell to a one-month low, while gold and silver jumped as expectations of an inflation shock-induced Federal Reserve interest rate hike dimmed. U.S. stock futures pointed higher and European stocks surged amid a significant uplift in trading volume.

Some analysts urged caution on whether the cease-fire would translate into an extended end to hostilities. Israel continued attacks against Iran overnight and Iran's Supreme National Security Council said its fingers are "on the trigger" ahead of negotiations starting Friday.

--In early European trading, the front-month Brent contract for June delivery slid 14.9% to $92.90 a barrel, while West Texas Intermediate futures for May fell 18.3% to $94.63 a barrel. Natural-gas prices also dropped, with the front-month Dutch TTF contract--the European benchmark--down 16.9% to 44.25 euros a megawatt-hour.

"The geopolitical risk premium that had accumulated over 26 trading days of conflict is now unwinding at speed," said Koen Hoorelbeke, investment and options strategist at Saxo Bank. However, a two-week cease-fire "does not constitute a durable resolution."

--U.S. stock futures pointed to a sharp rise at market open. Futures for the S&P 500 and the Dow Jones Industrial Average were up 2.5% and 2.3%, respectively. The tech-heavy Nasdaq was 3.2% higher premarket.

Tech stocks surge premarket, with Micron and Nvidia jumping 8.8% and 3.1%, respectively. Futures for cruise company Carnival surge 9.4%.

--Stocks in Asia were up as Japan's Nikkei 225 index gained 5.4%, and Hong Kong's Hang Seng gained 2.8%. China's benchmark Shanghai Composite gained 2.7%. Korea's Kospi 200 jumped 7.5%.

Chip stocks across Asia rose sharply as the conditional cease-fire buoyed investor sentiment about lower chip-making costs and a continued AI investment boom.

South Korea's SK Hynix surged 13% and Samsung Electronics jumped about 7% on Wednesday. Taipei-listed TSMC and United Microelectronics Corp. climbed 5% and 3.4%, respectively. In Hong Kong, SMIC, China's largest chip foundry, advanced more than 11% and Hua Hong Semiconductor soared over 14%.

--European stocks rallied across all sectors except energy, as the Europe-wide Stoxx 600 gained 3.7%. Germany's energy price-sensitive DAX surged 4.6%, with industrials and banks gaining. Airline Lufthansa leapt 11%. The French CAC 40 moved 3.3% higher as luxuries rebounded, while steelmaker ArcelorMittal jumped 13%.

London's FTSE 100 is 2.3% higher, lagging behind other indexes as falling oil majors weighed--BP and Shell slid 7.5% and 6.7%, respectively. Banks jumped, helping to push Spain's IBEX 35 up 3.6% and the Italian FTSE MIB up 3.8%. The Dutch AEX is 3.1% higher.

--The dollar fell to a one-month low. The cease-fire news sends oil prices lower and improves risk sentiment, denting the dollar due to America's position as a net oil exporter and the currency's safe-haven status. The DXY dollar index falls 1.1% to as low as 98.685.

--U.S. Treasury yields fell sharply across maturities in overnight trade. The 10-year Treasury yield slid to a three-week low of 4.240%, according to Tradeweb, before edging marginally higher to trade 10 basis points lower at 4.241%

Eurozone government bond yields also dropped sharply. Ten-year eurozone bond yields fell by up to 30 basis points, with more pronounced declines in Italian, French, Belgian, Spanish and Portuguese bonds yields than in German Bund yields. The 10-year German Bund yield was 17 basis points lower at 2.914%, having hit a three-week low of 2.901% earlier in the session, according to LSEG data.

--Bitcoin was up 3.7% to $71,825, having hit $72,679 overnight, LSEG data show.

--Gold climbed to a near three-week high. Futures in New York rose 3.3% to $4,843.10 a troy ounce. "Gold remains around 11% below late-February highs, following forced liquidation during the escalation in Middle East tensions, which temporarily weakened its safe-haven appeal," analysts at ING said. Meanwhile, silver futures jumped 7.1% to $77.10 an ounce, while platinum gained 4.6% to $2,037.90 an ounce

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(END) Dow Jones Newswires

04-08-26 0431ET