Stocks leap as Iran ceasefire sparks global ‘relief rally’

{"text":[[{"start":11.99,"text":"Stocks surged on Wednesday as a “relief rally” swept global markets after a two-week ceasefire between the US and Iran sent oil prices tumbling. "}],[{"start":22.73,"text":"The S&P 500 rallied 2.5 per cent, reversing more than half of the losses the index suffered between the beginning of the conflict and the end of Tuesday. In Europe and Asia — where a higher dependency on energy imports sparked a market rout in the early weeks of the conflict — stock markets notched up even bigger gains as fears of a global oil shock receded."}],[{"start":47.730000000000004,"text":"“This is a relief rally now that there is a clear endgame in sight,” said William Bratton, head of cash equity research for Asia-Pacific at BNP Paribas."}],[{"start":57.870000000000005,"text":"The Stoxx Europe 600 climbed 3.9 per cent and Germany’s Dax closed 5.1 per cent higher, both indices’ best day since early 2022. "}],[{"start":null,"text":"

"}],[{"start":70.51,"text":"Korea’s Kospi index rose 6.9 per cent, while Japan’s exporter-heavy Nikkei 225 index advanced 5.4 per cent. China’s CSI 300 index was up 2.8 per cent."}],[{"start":85.35000000000001,"text":"The equity gains came as oil prices fell sharply on Wednesday after the agreement between Washington and Tehran to reopen the crucial shipping chokepoint the Strait of Hormuz. The international oil benchmark Brent crude sank more than 13 per cent to $94.75 a barrel, while the US marker West Texas Intermediate dropped about 15 per cent to $96.20 a barrel. "}],[{"start":116.20000000000002,"text":"“The key game changer is that the resumption of oil flows through the Strait of Hormuz is central to the plan now under discussion,” said Ray Sharma-Ong, deputy global head of multi-asset bespoke solutions at Aberdeen Investments."}],[{"start":131.64000000000001,"text":"Wednesday’s moves mark a partial reversal of a stock slump — and record-breaking oil rally — during the six-week-old conflict, which came as investors worried that surging energy prices would spark a global wave of inflation and drive some economies into recession. "}],[{"start":150.47000000000003,"text":"Emmanuel Cau, head of European equities strategy at Barclays, said the ceasefire “removes the worst-case scenario, at least for now”."}],[{"start":160.92000000000002,"text":"“Further de-escalation remains the most rational outcome . . . Trump needs a ramp off given the mounting political and economic costs of the war, while Iran needs to maintain oil revenues,” Cau said. Therefore, “the path of least resistance for stocks is likely higher, even if oil surge may not fully reverse quickly given damage done to energy”. "}],[{"start":184.12,"text":"The US dollar, which had rallied during the conflict, tumbled on Wednesday. The greenback slid 1 per cent against a basket of other major currencies, reversing a large portion of the gains it notched up in March. "}],[{"start":198.3,"text":"European government bonds rallied sharply, sending yields lower, after the drop in energy prices allowed traders to dial back their bets on interest rate rises."}],[{"start":208.64000000000001,"text":"Yields on 10-year UK gilts tumbled 0.2 percentage points to 4.71 per cent, and German Bund yields of the same maturity fell 0.14 percentage points to 2.94 per cent. "}],[{"start":224.57000000000002,"text":"In the US, the 10-year yield was little changed by afternoon in New York at 4.3 per cent. "}],[{"start":null,"text":""}],[{"start":231.86,"text":"However, with significant damage already done to energy infrastructure in the Gulf, and oil prices still elevated, bond yields have a long way to fall to get back to their levels from before the conflict. Analysts also warned that Tuesday’s ceasefire remained fragile and ill-defined."}],[{"start":253.59,"text":"“This is the end of basically freedom of navigation [in the Strait of Hormuz],” said Alicia García-Herrero, chief Asia-Pacific economist at Natixis. “I’m not expecting this rally to last so long to be frank. The harm to the global economy is already there, and oil prices are still 50 per cent higher than where we were before the crisis started.”"}],[{"start":277.83,"text":"Aberdeen’s Sharma-Ong said: “We do not expect oil to reverse back to pre-conflict levels.”"}],[{"start":284.83,"text":"“Physical and logistical disruptions are not going to disappear overnight. In addition, higher shipping costs, war risk insurance, delays . . . and geopolitical risk premium are going to keep oil above previous levels for some time,” he added. "}],[{"start":308.43999999999994,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1775703849_1241.mp3"}