NEW YORK — Major stock markets surged on Wednesday following the announcement of a two-week ceasefire between the United States and Iran that includes provisions for safe passage through the Strait of Hormuz, traders and market reports said.
U.S. stock futures rose sharply in early trading, with S&P 500 futures up more than 2 percent, Nasdaq 100 futures gaining around 3.5 percent and Dow Jones Industrial Average futures climbing about 2.5 percent. European and Asian shares also advanced as investors welcomed the potential easing of tensions in the Middle East.
President Donald Trump announced late Tuesday that the U.S. would suspend bombing and attacks on Iran for two weeks, conditional on Tehran allowing the "complete, immediate, and safe opening" of the Strait of Hormuz. Iranian Foreign Minister Abbas Araghchi confirmed acceptance, stating that if attacks halted, Iranian forces would cease defensive operations and coordinate safe passage, subject to technical limitations.
The ceasefire, mediated by Pakistan, followed an escalation of conflict after U.S. and Israeli strikes on Iranian targets beginning in late February. Iran had restricted maritime traffic through the strait, a key route for global oil and gas shipments.
The announcement triggered a relief rally across risk assets. Oil prices fell sharply, with benchmarks dropping more than 13-15 percent to trade below $100 a barrel, according to market data. The declines reflected expectations of resumed shipping flows, though details on the volume and pace remained unclear early Wednesday. Some vessels were reported to have begun transiting the strait under Iranian coordination.
"Investors are breathing a sigh of relief as the immediate threat of wider disruption to energy supplies appears to have receded, at least for the next two weeks," one trader said, according to Reuters reports.
Negotiations between the U.S. and Iran are scheduled to begin in Islamabad on Friday, with Trump describing Iran's 10-point proposal as a workable basis for discussion. The ceasefire does not apply to Israel's operations in Lebanon, Israeli Prime Minister Benjamin Netanyahu stated.
Global bond yields fell and the dollar weakened as safe-haven demand eased. Energy stocks lagged the broader market gains amid the drop in oil prices.
As of midday in New York, the positive momentum in equities continued, with traders monitoring developments in the Gulf and any initial shipments through the strait. The situation was described as fluid by market participants.
