Ceasefire Changes Direction, Wall Street in the Green Zone
US stocks surged on Wednesday (April 8) after President Donald Trump said attacks on Iran would be suspended for two weeks, halting a five-week conflict that had shut down a vital global energy supply route and shaken market sentiment. The Dow Jones Industrial Average surged 2.9%, the S&P 500 rose 2.6%, and the Nasdaq Composite gained 3.3%.
The risk-on euphoria coincided with a sharp decline in oil prices. The WTI contract plunged more than 17% to US$93.42 per barrel, while the June Brent contract fell more than 16% to US$91.65 per barrel. These declines reflected the unwinding of the supply risk premium after the market assessed the likelihood of energy disruptions had eased, at least temporarily.
Trump attributed the suspension of attacks to a 10-point proposal from Iran that he considered a basis for negotiations. He asserted that a "two-sided" ceasefire hinged on the opening of the Strait of Hormuz. Iran agreed to open the waterway for two weeks on the condition that all attacks cease, and that transit must be coordinated with the Iranian Armed Forces. Media also reported that Israel agreed to the temporary pause.
The market will now monitor the implementation of the Hormuz opening, compliance with the ceasefire, and the direction of oil prices after the sharp decline, which will determine whether the risk asset rally can sustain.
Source: Newsmaker.id
