Asian-Pacific indices surge

US stock index futures stormed higher last night after President Trump confirmed the suspension of attacks on Iran. The announcement came just ahead of his previously stated deadline for Iran to reopen the Strait of Hormuz or face severe consequences.

These would include attacks on vital infrastructure such as power plants and bridges, which would bring chaos to Iranian citizens, not just the regime and its military. Instead, last night’s ceasefire announcement should bring a halt to hostilities, which are now in their sixth week.

Overnight, US stock index futures built on their gains made after Tuesday’s close. The S&P 500 came within a few points of 6,800 to hit its highest level in four weeks.

Source: TN Trader

Investors were cheered by a slump in crude oil as front-month Brent fell to within a few cents of $90 per barrel, trading at its lowest level in close to a month. President Trump said the decision to agree to a ceasefire followed receipt of a 10-point proposal from Iran that he described as a workable basis for negotiations.

The agreement is dependent on Iran reopening the Strait of Hormuz. Iran’s Supreme National Security Council confirmed that transit would resume for two weeks, provided attacks from the US and Israel were halted.

Initial media reports also indicated that Israel has agreed to the ceasefire terms, but this is looking less certain this morning. But it is far from clear what happens next. Tankers at either side of the Strait will need assurances from Iran that it is safe to cross. Owners and insurers may not want to take the risk.

In addition, there is speculation that Iran may demand payment for each ship or tanker wanting to make the journey. The big question then would be if President Trump viewed this as an acceptable deal under the ceasefire agreement. And all this takes place within a two-week window, with no clear idea of what a final and lasting peace agreement may look like.

Anyway, US Treasury yields dropped sharply this morning as investors took the view that a drop in oil prices was sustainable and would therefore reduce inflationary pressures. The CME’s FedWatch Tool saw the probability of a 25-basis point rate cut before year-end jump to 36% this morning from 13% yesterday.

The Federal Reserve will release the minutes of its last FOMC meeting later this evening. Earnings from Delta Air Lines are scheduled before Wednesday’s opening bell.

European stock indices were sharply higher this morning. This followed confirmation of the conditional ceasefire agreement between Washington and Tehran and the expected reopening of the Strait of Hormuz.

By mid-morning, the UK’s FTSE 100 was up over 2% while the German DAX added 4.5%. Both indices pulled back from highs hit soon after the open. This looks like a rally driven by relief that President Trump pulled back from the brink, yet again. This follows the severity of his threats aimed at Iran should Tehran fail to reopen the Strait of Hormuz ahead of last night’s deadline.

Source: TN Trader

So, there’s now a pause in hostilities, which was enough to see front-month Brent fall back towards $90 per barrel. But whether these early ‘risk-on’ moves are sustainable or not is another matter entirely. All eyes now turn to the Strait of Hormuz.

If shipping starts to move through it again, and there’s strong evidence that things can return to pre-war normality, then that will embolden investors. But given the complexity of the issues around this, a two-week ceasefire is unlikely to be sufficient to convince investors that it’s safe to go back in the water.

The US dollar slumped overnight as investors shifted away from safe-haven assets following the ceasefire announcement late yesterday. President Trump’s decision to suspend strikes against Iran triggered a broad risk-on rally across global markets, reducing demand for the dollar.

Source: TN Trader

Promises for the reopening of the Strait of Hormuz contributed to a sharp decline in crude oil prices, thereby easing inflation concerns. According to the CME’s FedWatch Tool, the probability of a rate cut by year-end rose to 36% this morning, from 13% yesterday.

Last week, investors were pricing in the possibility of a rate hike this year on expectations that stubbornly higher oil prices would add further to building upside inflationary pressures.

The cash Dollar Index was trading around 98.50 this morning, an area of mild support. Yet on Sunday night, the Index was once again testing resistance around 100.00. This repeated failure to break and hold above 100.00 has started to raise questions about where the US dollar goes next.

While it has been very strong of late, and the ‘go to’ currency in times of market stress, it could be that the Dollar Index’s inability to push above 100.00 will bring out the bears. If so, then there is a heightened risk that it pulls back and heads towards the lows hit in late January, below 96.00.

Gold flew higher overnight, breaking above $4,800, having come within a few dollars of $4,600 earlier on Tuesday. Gold got up to a three-week high above $4,850 in the early hours of Wednesday but has pulled back since.

Source: TN Trader

Lower oil, the weaker US dollar and falling Treasury yields all provided support for gold as markets reacted to news of a two-week ceasefire between the US/Israel coalition and Iran.

Traders are watching how it reacts around $4,800. If it can hold around here and then push higher, then this could encourage fresh buying. But there are concerns that the upside momentum may soon fade, particularly if the US dollar manages to find a foothold.

Silver was trading below $70 per ounce yesterday afternoon. It got caught up in a general ‘risk off’ move as investors reduced their exposure to financial assets ahead of President Trump’s deadline for Iran to reopen the Strait of Hormuz. It started to recover in the early evening, but then surged higher as news of the two-week ceasefire came through.

The announcement led to a sharp selloff in crude oil and the US dollar while other risk assets soared. The precious metal went on to hit a three-week high overnight above $77.60, before pulling back during the European session. The big test now is if silver can build on these gains and push back towards $80 per ounce.

Source: TN Trader

Its daily MACD is quite constructive from a bullish perspective as it continues to curl up off oversold conditions. But the geopolitical situation remains uncertain, and this can only contribute to silver’s inbuild volatility. Much now depends on the Strait of Hormuz, or rather, how quickly it takes to get tankers moving through it, and on what terms.

Crude oil prices fell sharply overnight. The plunge came after President Trump agreed to suspend planned attacks on Iran for two weeks in exchange for Tehran allowing safe passage to all vessels passing through the Strait of Hormuz.

The news eased immediate fears around one of the largest supply disruptions to crude oil supply in history. Front-month Brent dropped to within a few cents of $90 per barrel, posting its lowest level in a month. Front-month WTI experienced a near-20% drop from the overnight highs to overnight lows.

Source: TN Trader

Both contracts have recovered a touch this morning but remain comfortably below $100 per barrel. News of the ceasefire has been welcomed generally. But no one really knows what it will mean in practice. Two weeks is unlikely to be long enough to return to the level of shipping passing through the Strait of Hormuz pre-war.

Also, there is the factor of repairing the damage done to the energy infrastructure around the Gulf States. But it’s been taken as a ‘win’ for now. Perhaps the best outcome for near-term oil prices is consolidation around current levels. 

Cryptocurrencies pushed higher overnight. Sentiment improved following confirmation of the two-week ceasefire between the United States, Iran and, possibly, Israel. Bitcoin pushed towards $72,700 while Ether topped $2,250 with both hitting three-week highs.

Crude oil prices fell sharply overnight, reducing inflation fears while encouraging capital to rotate back into equities and digital assets. Meanwhile, Senate committees are reviewing key provisions within the Clarity Act ahead of a possible floor vote within the next few months.

Looking ahead, oil remains the central focus for markets. The sustainability of the current relief rally will depend heavily on whether crude prices stabilise at these lower levels, helping reduce volatility across asset classes. Today’s EIA crude inventory data will be closely watched for confirmation that supply conditions are improving, with expectations currently pointing to a decline of around 1.0 million barrels.

Investors will also monitor the release of the Federal Reserve’s March FOMC meeting minutes later in the session. While their immediate impact on the dollar may be limited given shifting war-related inflation dynamics since the meeting, traders will still look for guidance on the central bank’s policy outlook as markets continue to adjust to changing geopolitical risks.