Global markets rallied, and oil prices tumbled 4% on Tuesday after President Donald Trump announced a ceasefire between Israel and Iran. The news marked a dramatic reversal from the weekend when U.S. strikes on Iran’s nuclear sites had sent the region to the brink of a wider war.
The slide in oil prices, which began Monday, accelerated as the immediate threat to the vital Strait of Hormuz waterway appeared to fade. Brent crude fell to its lowest level since June 11. In response, equity markets rebounded strongly.
In Europe, the STOXX 600 gained sharply by 1.33%, with travel stocks surging while oil and gas shares fell. The rally was global, with strong gains observed across Asian markets, and U.S. futures indicated a higher open.
With geopolitical risks seemingly off the table, investors are shifting their focus back to trade and monetary policy. Adding fuel to the rally were comments from Federal Reserve officials, who signaled that interest rate cuts could be approaching, possibly as soon as July.
This outlook pushed the U.S. dollar lower against the yen and the euro—currencies that also benefit from lower oil prices. As risk appetite returned, safe-haven gold prices eased.
