Global markets rebound as US-Iran tensions ease

Global markets moved sharply higher after officials pointed to de-escalation steps between the U.S. and Iran, triggering a broad shift away from recent risk-off positioning. Energy prices fell quickly, equities rallied across regions, and government bonds gained as investors reacted to signs of reduced near-term disruption risk in key shipping lanes.

In oil, U.S. crude posted its biggest drop since 2020. Brent crude futures slid to about $94.50 a barrel, reflecting a rapid repricing of supply-risk premiums that had built up amid heightened geopolitical uncertainty. European natural gas futures also dropped by more than 15%, although prices were still described as elevated compared with levels seen before the conflict.

Equity markets responded with a strong rebound. Stock-index futures jumped, with contracts linked to the Nasdaq 100 pointing to gains of more than 3%. In cash markets, the rally spread across Asia and Europe: Japan’s Nikkei rose 5%, and Germany’s blue-chip index recorded a similar advance, underscoring the global nature of the move.

Bond markets strengthened at the same time, pushing yields lower. The rally in U.S. Treasuries drove yields below 4.3%, a move consistent with investors reducing expectations of sustained inflation pressure from energy and seeking duration as volatility eased. The cross-asset response—lower energy prices, higher equities, and falling yields—highlighted how closely markets were tracking developments tied to the Middle East and global trade routes.

Officials said the market reaction followed an agreement to suspend attacks for two weeks, with the pause contingent on the reopening of the Strait of Hormuz. The strait is a critical chokepoint for global energy flows, and any change in access can quickly influence pricing across oil, gas, and related transport and insurance costs.

Negotiations between the U.S. and Iran are scheduled to begin on Friday. While markets priced in near-term relief, the durability of the rebound remains dependent on whether the stated conditions are met and whether talks proceed as planned. Investors will be watching for confirmation around the two-week suspension, the status of the Strait of Hormuz, and any further official updates that could alter expectations for energy supply risks and broader financial conditions.