Asian markets jump and oil prices decline as Iran ceasefire agreement reached

TOKYO, April 8, (AP): Asian shares surged in Wednesday trading, as oil prices plunged after the US and Iran agreed to a two-week ceasefire that includes the reopening of the Strait of Hormuz. Japan’s benchmark Nikkei 225 gained 5.5% to 56,360.20 in afternoon trading. Australia’s S&P/ASX 200 jumped 2.6% to 8,951.80. South Korea’s Kospi soared 7.1% to 5,884.55.

Hong Kong’s Hang Seng surged 3.1% to 25,901.61, while the Shanghai Composite added 2.5% to 3,988.38. Benchmark US crude sank $18.23 to $94.72 a barrel. Brent crude, the international standard dropped $16.43 to $92.84 a barrel. Natural gas futures declined 20%.

Oil prices soared with the start of the war, which had effectively blocked passage through the strait that's a crucial route for global supplies. "Yet the mood remains one of cautious optimism rather than outright celebration.

The ceasefire is only two weeks long, and markets will be watching closely to see whether shipping through the Strait of Hormuz normalizes as promised and whether the fragile truce can pave the way for a more durable peace agreement,” said Tim Waterer, chief market analyst at KCM Trade. Late Tuesday, Trump said he was holding off on his threatened attacks on Iranian bridges, power plants and other civilian targets.

Iran’s foreign minister said passage through the strait would be allowed for the next two weeks under Iranian military management. At the end of trading on Wall Street, shares rallied after Pakistan’s prime minister urged Trump to extend his deadline for another two weeks and asked Iran to open up the strait. The S&P 500 erased all its losses and ended 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%. In the bond market, Treasury yields eased. The yield on the 10-year Treasury fell to 4.24% from 4.30% earlier Tuesday. In currency trading, the US dollar fell to 158.10 Japanese yen from 159.52 yen Wednesday. The euro cost $1.1700, up from $1.1597.

The dollar usually becomes a safe haven during geopolitical uncertainty, so the ceasefire deal worked to lessen that appeal. But analysts warned against too much optimism. "There is a reason to be optimistic, but it is still too early to tell, because, as you know, after all, it is Trump,” said Takashi Hiroki, chief strategist at MONEX.