Morning Bid: Big relief rally, for now

• Asian markets led gains with Japan's Nikkei up over 5% and South Korea's KOSPI rising more than 6%, while Europe's STOXX 600 climbed around 3.5%
• Both Brent and WTI crude futures dropped back below $100 per barrel after the ceasefire announcement, with the deal conditional on Tehran reopening the Strait of Hormuz
• U.S. Treasury yields fell as traders priced in potential Fed rate cuts, while UK bond yields dropped over 20 basis points in the biggest moves among developed markets

Market Summary: Global Relief Rally on U.S.-Iran Ceasefire

Key Development:

Global markets surged following announcement of a two-week ceasefire between the U.S. and Iran, announced by President Trump on Tuesday evening. The deal is conditional on Tehran reopening the Strait of Hormuz.

Market Performance:

• Equities: S&P 500 futures rallied sharply; global indices posted their largest daily gains since April 2024
• Japan's Nikkei: +5%
• South Korea's KOSPI: +6%
• Europe's STOXX 600: +3.5%
• Leading sectors: travel, banks, tech, and industrials (benefiting from cheaper energy and falling yields)
• Energy stocks were the biggest decliners

Oil Markets:

• Brent and WTI crude fell back below $100/barrel from recent highs
• Brent currently trading above $90, still elevated by pre-war standards
• Significant oil volumes trapped in the Middle East Gulf since hostilities began could provide immediate relief if Hormuz reopens

Currency & Bonds:

• Dollar index fell from 11-month highs, weakening against major currencies including the Japanese yen (which retreated from the 160-per-dollar threshold)
• U.S. Treasury yields declined as traders repriced Fed rate cut expectations
• UK bond yields dropped over 20 basis points, showing the largest moves
• Euro zone yields fell as ECB rate hike bets scaled back

Outlook:

U.S.-Iran negotiations are scheduled to begin soon, though analysts remain cautious about the ceasefire's durability. Markets haven't fully returned to pre-war risk appetite, suggesting continued uncertainty about long-term resolution prospects.