Markets surge on US-Iran ceasefire

Stocks and bonds surged on Wednesday after US President Donald Trump announced a two-week ceasefire with Iran, easing fears of immediate escalation. The announcement followed Iran’s agreement to halt counter-attacks and provide safe passage through the Strait of Hormuz if attacks against it stop.

European equities rose nearly 4 per cent, Asian markets posted strong gains, and Wall Street futures pointed to increases of 2.5–3.2 per cent. The US dollar fell broadly, while gold climbed 2.4 per cent to $4,814 per ounce.

US Treasuries rallied, with the 10-year yield falling to 4.244 per cent and the 2-year to 3.7235 per cent, reflecting renewed speculation over potential Federal Reserve rate cuts. Eurozone government bond yields also dropped sharply amid expectations of a pause in ECB rate hikes.

Investors welcomed the short-term relief but remained cautious, noting that a lasting peace would be required before taking on significant new risks.

Attribution: Reuters