Global market relief on US tariff optimism

What happened: A two-week ceasefire between the U.S. and Iran, announced on January 3, triggered a global relief rally. Oil prices slumped 14% towards $90 a barrel, easing inflation concerns and boosting stocks. Canadian, European, and U.S. markets surged, while gold and Treasurys remained in demand. President Trump also hinted at U.S. troop withdrawal from the Middle East.

Market impact: Energy stocks and oil prices tumbled, benefiting sectors sensitive to inflation like technology and consumer discretionary. The S&P/TSX Composite Index gained 1.5%, European stocks soared, and U.S. futures rose. Conversely, U.S. oil & gas stocks like ExxonMobil and Chevron declined. EU exports to the U.S. dropped 26% in February due to tariffs, but the ceasefire offered temporary respite.

What to watch next: On January 17, the U.S. and China are set to sign the phase one trade deal, which could further boost markets if tariff rollbacks are substantial. On January 23, the U.S. Federal Reserve's policy decision may indicate if lower oil prices influence monetary policy. Additionally, oil prices' response to any ceasefire extension or breakdown will be crucial for energy stocks and inflation-sensitive sectors.