Morning Wrap: US-Iran Ceasefire Sends Stocks Soaring and Oil Crashing — Here's What It Means for Your Money
Global markets erupted in a wave of relief overnight after the United States and Iran struck a two-week ceasefire deal. Wall Street surged and oil prices plunged, reigniting hopes a US Federal Reserve interest rate cut.
The S&P 500 jumped 2.5 per cent, the Nasdaq 100 climbed 2.9 per cent and the Dow Jones Industrial Average gained 2.8 per cent as investors scrambled to unwind defensive positions built up during weeks of Middle East tensions.
The MSCI World Index rose 3 per cent — its biggest single-day gain in months.
The Iran deal came just 90 minutes before a deadline set by President Donald Trump for Iran to agree to a truce and reopen the Strait of Hormuz, the critical chokepoint through which roughly a fifth of the world's oil flows.
US crude settled below $95 a barrel, plunging more than 15 per cent on the day, while spot gold edged up 0.5 per cent to $US4,731 an ounce.
"The reaction was classic macro playbook," said Fawad Razaqzada at Forex.com.
"Risk assets caught a bid, crude tumbled, and the dollar gave back a chunk of its safe-haven premium."
Wall Street's so-called fear gauge — the CBOE Volatility Index, or VIX — sank to pre-war levels as hedge funds rushed to close short positions at a pace not seen since the pandemic rebound of March 2020, according to Goldman Sachs' trading desk.
Airlines, which had been hammered by soaring fuel costs, were among the biggest winners.
Delta Air Lines had warned it expected to absorb more than $2 billion in additional fuel costs through June due to the conflict. Emerging market shares jumped the most since the onset of the pandemic.
Bitcoin topped $US71,000, rising 2.9 per cent, while Ether surged 4.6 per cent as the broader risk-on mood swept through crypto markets.
The ceasefire also revived bets that the Fed could resume rate cuts in 2026. Minutes from the Fed's March meeting showed most officials were worried a prolonged war could damage the jobs market and push rates lower.
With oil now easing, analysts say the inflation threat has diminished significantly.
"Relief in the oil market removes inflation as a meaningful risk for now," said David Russell at TradeStation.
US Vice President JD Vance is set to lead a delegation to Pakistan later this week for talks aimed at securing a longer-lasting peace agreement with Iran.
Markets cautioned, however, that a two-week truce is far from a resolution and that the rally could reverse quickly if hostilities resume.
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