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US Futures, Global Stocks And Bonds Soar On Ceasefire Relief, Oil Plummets

US futures, global stocks and bonds are sharply higher while oil prices plunge the most in years as a wave of optimism swept through global markets after the US and Iran agreed to a two-week ceasefire in exchange for Tehran reopening the Strait of Hormuz: JPMorgan's Market Intel desk, which moves from Neutral to Tactically Bullish this morning, says to look for a re-risking in the very near-term albeit it with higher energy prices. As of 8:00am ET, S&P futures are 2.8% higher while emerging-market stocks rallied the most since 2022; Nasdaq gains 3.5% with Mag7 and Semis seeing significant bids as part of an ‘Everything Rally’ ex-Energy. Yet while the overwhelming mood in markets is relief, the same core challenges remain to find a resolution amenable to both countries and Goldman's Delta-One head says he is selling the rally. Brent plunged 16% to around $93 a barrel. Bonds surged, with 10Y tsy yields sliding 8bps to 4.23% while benchmark UK yields tumbled by 22 basis points. The dollar weakened to a one-month low. Gold and silver gain. The macro data focus today is on the Fed Minutes ahead of PCE and CPI releases later this week.

In premarket trading, Mag 7 stocks are all sharply higher: Meta +5%, Tesla +4.5%, Alphabet +4%, Nvidia +3.5%, Amazon +4%, Microsoft +3.3%, Apple +2%

Gainers also include precious-metal miners and financial firms, while chemical and fertilizer names fall.
Energy stocks fall due to the ceasefire: Exxon (XOM) -5.3%, Chevron (CVX) -4.3% and Venture Global (VG) -11%
Airlines rally: United (UAL) +11%, Delta (DAL) +10%
Aehr Test Systems (AEHR) climbs 8% after the semiconductor manufacturing company reported third-quarter results. The earnings prompted Craig-Hallum to raise its rating to buy, citing “improving business momentum and significant growth opportunities over multiple business segments.”
Levi Strauss (LEVI) gains 9% after the apparel company boosted its adjusted earnings-per-share and revenue forecasts for the full year citing strong demand as the denim brand steers shoppers to its own stores and website.
In corporate news, Super Micro Computer launched an internal probe to investigate circumstances surrounding server sales to China. Elon Musk is seeking to have Sam Altman removed from his roles at OpenAI as part of his legal challenge to the company’s conversion to a for-profit company.

The ceasefire announcement came not long before a deadline Trump had set that threatened a major escalation of the war. “We have now stepped back off the edge of the precipice,” said Aviva’s Richard Saldanha. The rapid twists and turns of the war have led to a record intensity of stock trading, according to a measure of daily SPY ETF turnover.

Looking at overnight markets, the most dramatic moves were in oil markets. European natural gas futures posted their biggest decline in more than two years, shedding as much as 20%. Prices of refined fuels such as diesel and jet fuel — which had been the biggest threats to global inflation — also tumbled.

As part of the two-week truce, Iran said it will allow ships to sail through the Strait of Hormuz, easing the chokehold on energy supplies that have threatened to cripple the global economy and accelerate inflation. A potential snag comes from the FT which reports that Iran demands fees for ships passing through the strait and will ask payment for tolls in crypto payment. While many investors cautioned that there is still a wide gap in the negotiation demands of Iran and the US, the widespread view was that stocks have fallen so sharply in recent weeks that any de-escalation path would be enough to trigger a rebound. 

“This is also showing promising signs that we’ve dodged the worst-case scenario,” said Matthew Haupt, a fund manager at Wilson Asset Management in Sydney. “It’s a good result considering the alternatives, as it shows a willingness to get something done.”

The latest news has left the Trump Reversal Index — a gauge created by Bloomberg strategist Simon White that combines various macro indicators — back to not much higher than where it was before the war started.  Light positioning is also fueling Wednesday’s relief rally. Volatility-control funds’ allocations to US equities had recently fallen to 56%, the lowest since July, according to Barclays.

What comes next will depend on five questions, according to Jennifer Welch, chief geoeconomics analyst at Bloomberg Economics. These include whether Iran fully reopens Hormuz and whether Israel sticks to the ceasefire. Hormuz will “never go back to the way it was before,” said Vital Knowledge’s Adam Crisafulli. “Iran’s ability to shut the waterway will embed a risk premium in the price of all commodities flowing through it for the foreseeable future.” More than 800 ships are currently trapped in the Persian Gulf.

In politics, US regulators unveiled a plan to overhaul rules intended to prevent money laundering. US Trade Representative Jamieson Greer promoted the creation of a US-China board of trade, while downplaying the possibility of a similar group focused on bilateral investment.

Traders are now back to seeing a strong chance that the Federal Reserve will cut interest rates this year. Swaps are signaling a 60% likelihood of a rate cut by the year-end, compared with almost no chance seen at the start of this week. Before the war started, they had priced in more than two reductions.

Some of the world’s largest investment firms are betting the market turbulence is past its peak and are buying bonds and artificial-intelligence stocks, while selling the dollar. Kellie Wood at Schroders Plc snapped up short-dated bonds including Treasuries on Wednesday morning. Jupiter Asset Management Ltd. is considering doing the same alongside plans to sell the greenback. Allspring Global Investments is buying tech and defense stocks that are seen as insulated from energy shocks.

European stocks are soaring: the Estoxx 50 up more than 5% and the Stoxx 600 is up 4% alongside a 14% decline in Brent crude as  markets cheer news of the US and Iran agreeing to a two-week ceasefire, even if the truce is a “fragile” one. European equity sectors are mostly higher with outperformance in travel, IT and consumer discretionary. Airline stocks, which have been pummeled by concerns of skyrocketing energy prices, lead gains in Europe. EasyJet Plc and Deutsche Lufthansa AG both jumped more than 10%. Energy stocks post material losses.Here are the biggest movers Wednesday:

European oil stocks plunge on an otherwise broadly risk-on day, with airlines and technology shares particularly strong after the US and Iran agreed to a two-week ceasefire, sending the crude price tumbling and other asset classes soaring. Luxury-goods stocks, miners and chemicals stocks also rise strongly
Close Brothers shares surge as much as 23%, the most since August, as the lender said the estimated cost of the FCA’s motor finance redress proposal is broadly similar to its existing provision
Gamma Communications shares soar as much as 15%, their biggest intraday gain on record, after the telecom services company said it’s in preliminary talks with a number of potential bidders
Redcare Pharmacy shares rise as much as 16% after the German firm’s preliminary first-quarter figures reassured analysts. Shares in Swiss peer DocMorris gain as much as 9.9%
Polish coal miners Bogdanka and JSW slump after the US and Iran agreed to a two-week ceasefire. The move is expected to ease the energy shock, denting bets on a broader return to coal-fired power in Europe
Shares in Norway’s Yara fall as much as 13%, while Germany’s K+S drops as much as 13%, after the US and Iran agreed to a two-week ceasefire in exchange for Tehran reopening the Strait of Hormuz
Stocks in Dubai — a key target of Iranian attacks during the conflict — jumped 8.5%, the most since Dec. 2014. Pakistan equities were also among the top gainers, after the country emerged as a key mediator in the ceasefire.

Still, there were continued reports of hostilities, underscoring the fragility of the deal. The UAE said it responded to a missile threat as of early afternoon local time, while Kuwait’s army cited “intense” attacks from Iran throughout the morning. “Markets have been moving very quickly, setting us up for a relief rally,” said Neil Birrell, chief investment officer at Premier Miton Investors. “What will happen in the next few weeks — who knows? It’s hard to believe that this is a long-term resolution.”  

Asian stocks rose for a fourth straight day to a one-month high as oil prices tumbled after a two-week US-Iran ceasefire, easing fears of supply disruptions and inflation. The MSCI Asia Pacific Index gained 4.9%, led by heavyweight chipmakers including Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Co. South Korea’s Kospi surged nearly 7%, leading gains in the region, while benchmarks in Japan and Taiwan advanced more than 3% each. Shares also advanced more than 3% in mainland China, Hong Kong and India. The Reserve Bank of India held key interest rates at Wednesday, striking a cautious tone as it monitors the impact of surging oil prices on the economy and pledges to curb any excessive currency moves.

In FX, the Bloomberg Dollar Spot Index is down 0.8% with the greenback lower versus all major peers. The kiwi is one of the better G-10 performers following the hawkish hold from the RBNZ.

In rates, global bond yields are materially lower with German and UK 2-year borrowing costs down 22bps and 25bps respectively as traders scale back ECB and BOE hike bets. The US curve is in bull-steepening mode with traders pricing a circa 50% chance of a Fed rate cut by year-end. Treasury futures trade near session highs reached following gap higher at the Asia open, with oil benchmarks down more than 10% and stocks surging after US and Iran set a two-week ceasefire and Tehran pledged to reopen the Strait of Hormuz. US yields are lower by 3bp-6bp across a steeper curve as long-end tenors lag front-end and belly; 10-year is lower by more than 6bp near 4.23%. Swap spreads leg higher as demand pours in for cash Treasuries, with long-end spreads wider by nearly 3bp. The US session includes 10-year note reopening; demand was strong for Tuesday’s 3-year new issue.  Treasury’s $39 billion 10-year note reopening has WI yield near 4.24%, about 2bp cheaper than last month’s auction, which tailed by 0.7bp; auction cycle concludes Thursday with $22 billion 30-year reopening

In commodities, WTI crude oil futures are down about 16% near session lows; their biggest drop since the covid crash; Brent crude fell as much as 16% and European natural gas futures posted their biggest decline in more than two years despite uncertainty about how quickly transit through Hormuz can resume. Precious metals are gaining, with spot gold and silver up 1.7% and 5.3% respectively. Bitcoin has added 3.2%.

Looking at today's calendar, the US economic data calendar is blank; Fed speaker slate includes San Francisco’s Daly at 1:05pm, and FOMC releases minutes of March meeting at 2pm.

Market Snapshot

S&P 500 mini +2.7%
Nasdaq 100 mini +3.5%
Russell 2000 mini +3.8%
Stoxx Europe 600 +3.8%
DAX +4.7%
CAC 40 +4.2%
10-year Treasury yield -6 basis points at 4.23%
VIX -5.5 points at 20.26
Bloomberg Dollar Index -0.8% at 1200.59
euro +0.8% at $1.1685
WTI crude -15.9% at $95.04/barrel
Top Overnight News

Oil headed for the biggest drop in six years and global equities surged after the US and Iran agreed to a two-week ceasefire in exchange for Tehran reopening the Strait of Hormuz. Donald Trump said the US will help relieve Hormuz traffic with more than 800 vessels still trapped in the Persian Gulf. Benjamin Netanyahu said Israel supports the ceasefire but said it doesn’t include Hezbollah in Lebanon. BBG
Kuwait said it’s dealing with “intense” Iranian attacks this morning and some Arab states reported continued attacks. BBG
NATO chief Mark Rutte meets Trump today, hoping to temper the president’s anger that alliance members have refused to help. But Rutte’s own allies are questioning whether his deferential approach is appropriate, or even working, according to people familiar. BBG
Chinese imports into the US haven’t dropped as much as the headline numbers might suggest as companies slash the value of their shipments “using tactics ranging from legal accounting tricks to outright fraud.” NYT
The Treasury Department wants to talk to state insurance commissioners about the private loans piling up in insurers’ portfolios. Those state regulators have been keeping some of their thoughts to themselves.

DB's Jim Reid concludes the overnight wrap

Markets are seeing a sharp rebound overnight following news that the US and Iran agreed to a two-week ceasefire. Trump posted that following a request by Pakistan, he agreed to suspend attacks against Iran for two weeks subject to Iran agreeing to “the COMPLETE, IMMEDIATE and SAFE OPENING of the Strait of Hormuz”. He claimed that the US had already met its military objectives and called the 10-point proposal received from Iran a “workable basis on which to negotiate”. Tehran accepted the ceasefire proposal “if attacks against Iran are halted”. Foreign Minister Araghchi also announced that, in response to Trump’s “acceptance of the general framework of Iran’s 10-point proposal”, safe passage through the Strait of Hormuz will be possible for two weeks “via coordination with Iran’s armed forces and with due consideration to technical limitations”. The AP has reported that the plan will allow Iran and Oman to charge fees for transits through the Strait. Meanwhile, Pakistan’s Prime Minister Sharif has invited US and Iran for talks in Islamabad on Friday (April 10) to negotiate a “conclusive agreement”.

Investors will be breathing a big sigh of relief that an offramp out of the war is being taken even as there’ll be various elements to watch to see whether this leads to sustained de-escalation. Will the ceasefire hold? We saw some strikes by Israel and Iran overnight though these may have been in the works before the conditional ceasefire. We’ve also seen conflicting commentary on whether the ceasefire will extend to Israel’s action in Lebanon. Can talks lead to a permanent cessation of hostilities? Trump’s comment last night that “Almost all of the various points of past contention have been agreed to” suggests a lower bar for agreement, but Iran’s reported 10-point plan includes elements such as the lifting of all sanctions and Iran controlling the Strait of Hormuz that have previously been unacceptable to the US and allies. Those points also do not restrict Iran’s enriched uranium, which Trump suggested would be "perfectly taken care of" as he claimed a “total and complete victory" in an interview to AFP late last night. And in his latest post overnight, Trump appeared keen to lean into the prospects for full resolution, claiming “a big day for World Peace” and that the US “will be helping with the traffic buildup in the Strait of Hormuz”.

Indeed, the most important question for markets will be to what extent does shipping via Hormuz pick up in the coming days. For now, oil prices have plummeted on the ceasefire news, with Brent crude down -13.51% to $94.51/bbl this morning as I type, its lowest intra-day level in four weeks. It had been at nearly $110/bbl before the news of Pakistan’s ceasefire proposal began to emerge but then fell as low as $91/bbl as the ceasefire was confirmed early in the Asian session before recovering slightly. WTI is similarly down -14.92% to $96.10/bbl.

In turn, risk assets are seeing a sharp rally. S&P 500 futures are up +2.48%, which leaves them less than 2% below the levels on February 27 before the Iran strikes began and +6.8% up from their closing low on Mach 30. NASDAQ futures are +3.15%, while those on Euro STOXX 50 are +5.42% higher after a weak session yesterday. Asian equities are also rallying strongly, with the KOSPI (+7.26%) and the Nikkei (+5.26%) at the forefront. The Hang Seng (+2.82%) is advancing after the holiday, while the CSI (+2.76%) and the Shanghai Composite (+1.92%) are also seeing solid gains in mainland China, as is the S&P/ASX 200 (+2.71%) in Australia.

On the fixed income side, 2yr (-6.8bps to 3.72%) and 10yr (-5.2bps to 4.24%) Treasuries are seeing a sizeable rally, with 10yr JGBs (-4.9bps) posting a similar advance. Fed funds futures are now pricing 14bps of Fed cuts by December, up from zero when Europe went home yesterday. And in FX, the dollar index is down -0.92%, while gold is +2.00% higher. Bitcoin has added 3.2%.

Looking at today's calendar, the US economic data calendar is blank; Fed speaker slate includes San Francisco’s Daly at 1:05pm, and FOMC releases minutes of March meeting at 2pm.

Market Snapshot

S&P 500 mini +2.7%
Nasdaq 100 mini +3.5%
Russell 2000 mini +3.8%
Stoxx Europe 600 +3.8%
DAX +4.7%
CAC 40 +4.2%
10-year Treasury yield -6 basis points at 4.23%
VIX -5.5 points at 20.26
Bloomberg Dollar Index -0.8% at 1200.59
euro +0.8% at $1.1685
WTI crude -15.9% at $95.04/barrel
Top Overnight News

Oil headed for the biggest drop in six years and global equities surged after the US and Iran agreed to a two-week ceasefire in exchange for Tehran reopening the Strait of Hormuz. Donald Trump said the US will help relieve Hormuz traffic with more than 800 vessels still trapped in the Persian Gulf. Benjamin Netanyahu said Israel supports the ceasefire but said it doesn’t include Hezbollah in Lebanon. BBG
Kuwait said it’s dealing with “intense” Iranian attacks this morning and some Arab states reported continued attacks. BBG
NATO chief Mark Rutte meets Trump today, hoping to temper the president’s anger that alliance members have refused to help. But Rutte’s own allies are questioning whether his deferential approach is appropriate, or even working, according to people familiar. BBG
Chinese imports into the US haven’t dropped as much as the headline numbers might suggest as companies slash the value of their shipments “using tactics ranging from legal accounting tricks to outright fraud.” NYT
The Treasury Department wants to talk to state insurance commissioners about the private loans piling up in insurers’ portfolios. Those state regulators have been keeping some of their thoughts to themselves.