Wall Street's main indexes climbed to near one-month highs today after the US and Iran agreed to a two-week ceasefire, sending crude prices lower on expectations that energy supplies through the Strait of Hormuz could resume.
Global markets, which had been reeling under conflicting signals for weeks, staged a rally, with stock bourses in Asia and Europe rising, while crude prices slid below $100 a barrel.
"Whether these early 'risk-on' moves are sustainable or not is another matter... If shipping starts to move through the Strait of Hormuz again, and there's strong evidence that things can return to pre-war normality, that will embolden investors," said David Morrison, senior market analyst at Trade Nation.
"But given the complexity of the issues around this, a two-week ceasefire is unlikely to be sufficient to convince investors that it's safe to go back in the water."
At 2pm GMT, the Dow Jones Industrial Average rose 1,308.99 points, or 2.81%, to 47,893.45, the S&P 500 gained 155.91 points, or 2.36%, to 6,772.76 and the Nasdaq Composite gained 617.51 points, or 2.81%, to 22,635.36.
Travel-linked stocks jumped, with Southwest Airlines and United Airlines advancing 10.8% and 12.8%, respectively. They boosted industrial stocks on the S&P 500 by 3.8%, the top gainers.
Dow was lifted by gains in Goldman Sachs and American Express.
European stock markets continue to soar this afternoon after the US and Iran agreed a two-week ceasefire with investor relief sending shares surging.
The Dublin market had jumped by 7% this afternoon, with Ryanair up 12.7%. Kingspan and the banks were also among the big gainers along with Cairn Homes and Glenveagh Properties.
Meanwhile shares in Paris rallied 4.6%, while they jumped by 4.9% in Frankfurt and London saw gains of 2.6% with airlines among the biggest gainers as oil prices plunged.
Earlier in Asian trade, Japan's Nikkei index closed up more than 5% while the Hang Seng in Hong Kong gained 3.1%.
Market reaction was swift after US President Donald Trump agreed to a two-week ceasefire with Iran, less than two hours before his deadline for Tehran to reopen the Strait of Hormuz, where 20% of the world's oil transits, or face devastating attacks on its civilian infrastructure.
Beyond the immediate relief, investors are waiting to see whether the truce can pave the way for a lasting resolution.
Energy markets also responded swiftly, with Brent crude futures falling 15% below $100 a barrel, offering some respite after weeks of elevated oil prices.
European equities have been under intense pressure since the US-Israel military campaign against Iran erupted on February 28, with the continent's heavy dependence on oil imports throught he largely blocked passage amplifying the pain.
Sectors linked to travel, industrials, and banking advanced between 5% and 7%, as they are typically seen as prime beneficiaries of lower energy costs and falling bond yields.
Meanwhile, the energy sector lost 4.2% as crude prices tumbled.
Investors will turn their attention to euro zone retail sales and producer price data, due later in the day, which could provide further insight into the economic impact of recent energy market volatility.
