Global Markets Rally on Ceasefire News as Oil Slumps 16% Below $100

Global markets rallied this morning following news of a proposed two-week ceasefire, offering a temporary reprieve for investors amid heightened geopolitical tensions, according to Josh Gilbert, Market Analyst at eToro. While the development has provided short-term optimism, Gilbert cautioned against interpreting the pause as a lasting resolution.

Crude oil prices saw a sharp correction, falling approximately 16% to below $100 per barrel, as markets began pricing in the potential reopening of the Strait of Hormuz. “It goes to show how much geopolitical risk was baked into crude, and how quickly it can unwind when there's a credible path to de-escalation,” said Gilbert.

The positive sentiment extended across asset classes, with equity futures surging and gold climbing above USD 4,800, reflecting both renewed risk appetite and continued demand for safe-haven assets. “This was a market that had been starved of good news,” Gilbert added.

Gilbert noted that lower oil prices are broadly supportive for global markets, easing pressure on consumers, moderating inflation expectations, and removing a key headwind that has weighed on equities in recent weeks.

However, he emphasised that risks remain. “Investors shouldn’t get ahead of themselves. A two-week window is not a permanent resolution, and we’ve seen deadlines extended multiple times before,” he said. “The rally in risk assets makes sense on the headline, but it will need to be backed up by tangible progress in negotiations to hold.”

Looking ahead, Gilbert highlighted that the key uncertainty lies in whether Iran will permanently reopen the Strait of Hormuz and whether a lasting agreement can be reached. “If shipping lanes reopen and oil normalises, that would be a turning point for global markets. If the two weeks pass without a deal, expect a sharp and unforgiving reversal of this relief rally,” he concluded.