On Wednesday, global stock markets surged, with the S&P 500 Index rising 2.51%, the Dow Jones Industrial Average up 2.85%, and the Nasdaq 100 increasing 2.90%. This rally was prompted by a two-week ceasefire agreement between the US and Iran, which included the reopening of the Strait of Hormuz. As a result, crude oil prices dropped more than 15%, hitting a 1.5-week low, which alleviated inflation concerns and fueled a risk-on sentiment across equity markets.
In related news, over 800 vessels remain trapped in the Persian Gulf due to geopolitical tensions, while the International Energy Agency highlighted that 40 energy sites across nine Middle Eastern countries have been severely damaged. Meanwhile, US mortgage applications fell by 0.8% during the week ending April 3, though the average 30-year fixed mortgage rate now sits at 6.51%. The Federal Open Market Committee (FOMC) indicated elevated risks regarding inflation and employment amid developments in the Middle East.
International equities also performed well, with the Euro Stoxx 50 gaining 4.97% and Japan’s Nikkei 225 up 5.39%. The 10-year T-note yield fell to a three-week low of 4.228%, reflecting easing inflationary pressures, while European government bond yields also declined sharply. These movements in bond markets were coupled with a strong performance in sectors such as chipmakers, airlines, and homebuilders, further contributing to the overall market optimism.
