Markets soar as us and iran reach ceasefire deal
Global markets surged on Wednesday as news broke of a temporary ceasefire agreement between the United States and Iran, sending shockwaves through energy and financial markets.
Global stocks jump amidst falling oil prices
The Nikkei in Tokyo led the charge, surging 5.6%, while South Korea's Kospi index surged 7.7% and extended its winning streak to four consecutive sessions. The Shanghai Composite in China rose 4.1%, and Hong Kong's Hang Seng index, which had been closed for days, rallied by over 3%.
The price of crude oil plummeted, hitting its lowest level in nearly six years, as the agreement to suspend US airstrikes against Iran came into effect. West Texas Intermediate, the US benchmark, tumbled 19%, while Brent crude, the global benchmark, fell 13% to $94.50 per barrel.
The MSCI Asia Pacific index jumped 5%, reaching its highest level in five weeks, as investors bet that lower oil prices would help contain inflation and boost economic growth.
Impact on financial markets and currencies
US Treasury bonds rallied as the diminished threat of war and economic disruption reduced inflationary pressures, prompting investors to speculate on potential interest rate cuts by the Federal Reserve.
The US dollar, which had become a safe-haven currency during the conflict, fell 0.8%, while gold prices climbed 2.4% to $4,818.52 per ounce.
European futures also pointed to strong gains at the open, with the Euro Stoxx 50 and Frankfurt's DAX30 index set to rise over 5%, while the rest of the continent's bourses were expected to rise by more than 2%.
South korea's surging markets
South Korean stocks and the won currency surged as the ceasefire deal put semiconductor giants Samsung and SK Hynix in the spotlight, with the latter's shares jumping 15%. The won hit its highest level since March 11 against the dollar.
South Korea's 10-year bond futures rose to their highest level since March 19, while three-year bond yields fell to 3.3%, as the reduced inflationary pressures and expectations of no near-term rate hikes by the Bank of Korea ahead of its policy meeting on Friday boosted investor sentiment.