Oil prices sank and Asia markets and U.S. stock futures jumped after the United States and Iran agreed to a two-week ceasefire, an agreement that included reopening the Strait of Hormuz, according to The Associated Press. The market reaction underscored how quickly investors adjusted expectations for crude supply risk and transport through a key shipping chokepoint in the Persian Gulf.
The ceasefire deal helped pull oil lower to levels traders had not been pricing in during earlier weeks of heightened uncertainty. AP reported that U.S. crude futures for May fell 14.3% to $96.83 a barrel, while Brent crude, the international benchmark, dropped 13.3% to $94.74. AP said oil had previously spiked as the war snarled production and transportation of crude in the Persian Gulf, where much of the oil exits through the Strait of Hormuz.
Asian markets climbed sharply in the wake of the announcement. AP reported that Japan’s Nikkei 225 rose 4.8% and that South Korea’s Kospi gained 5.6%. In the same report, AP said U.S. stock futures pointed higher as well, with futures for the S&P 500 up 2.3% and Dow futures up 2% as of 9:30 p.m. EDT.
AP also described how late Tuesday U.S. President Donald Trump said he was holding off on threatened attacks on Iranian bridges, power plants and other civilian targets. The Associated Press said Iran’s foreign minister told AP that passage through the Strait of Hormuz would be allowed for the next two weeks under Iranian military management.
The swings came after a broader pattern of rapid changes in market sentiment since late February, driven by inconsistent signals about when the conflict might end. AP said even with word of a ceasefire, neither the United States nor Iran said when it would begin, and attacks took place in Israel, Iran and across the Gulf region early Wednesday.
In the U.S., AP said stocks swung during regular trading as uncertainty increased after Trump threatened in connection with an 8 p.m. Eastern time deadline to open the Strait of Hormuz. AP reported that the S&P 500 fell as much as 1.2% during the day but later recovered, ending with a modest gain of 0.1%. The Dow Jones Industrial Average dipped 85 points, or 0.2%, and the Nasdaq composite added 0.1%.
AP’s report also tied the market’s message to the inflation and interest-rate expectations that accompany oil price moves. It said the risk for traders was that a long-term disruption would keep oil prices high for a sustained period, pushing inflation higher and weighing on the global economy. AP cited that the average price of regular gasoline across the United States had risen to $4.14 per gallon, and it said Treasury yields eased on the prospect of a ceasefire, with the 10-year Treasury yield falling to 4.24% from 4.30% earlier Tuesday—still above the 3.97% level from before the war, AP said.