Wall Street Roars Back and Oil Tumbles as Trump Touts Imminent Iran Peace Deal
Stocks rallied and crude prices sank more than 3% after the president said an agreement to end the war and reopen the Strait of Hormuz could be signed within days.
Wall Street staged a powerful rebound this week and oil prices tumbled more than 3% after President Donald Trump said the United States was on the cusp of signing a deal with Iran to end the war and reopen the Strait of Hormuz, easing the single biggest fear that has hung over global markets for two months.
The Dow Jones Industrial Average surged roughly 900 points on the news, clawing back losses from earlier in the conflict as investors bet that a ceasefire would pull crude off the boil and lift the cloud of uncertainty that had whipsawed equities. The relief rally rippled across Asian and European exchanges, where shares jumped in tandem with the retreat in oil.
Crude had spiked toward $100 a barrel at the height of the fighting, as traders priced in the risk that a closure of the Strait of Hormuz — the chokepoint through which roughly a fifth of the world's oil flows — could choke off supply and reignite inflation. The prospect of pre-war shipping resuming within weeks sent prices sliding back below that threshold and dragged energy-linked inflation expectations down with them.
The whiplash has been a defining feature of the war's market backdrop. Stocks have yo-yoed for weeks, lurching lower each time Trump threatened fresh strikes and snapping higher whenever diplomacy appeared to gain traction. "Hope has been quick to reverse to doubt," one strategist noted, capturing a tape that has rewarded traders willing to fade every headline.
Central banks have been caught in the crossfire. The European Central Bank raised its key rate by a quarter point to 2.25% this week, citing the war's tendency to blow inflation off target, while the Federal Reserve has signaled it is watching the conflict's impact on energy prices closely as it weighs the timing of rate cuts later this year.
Analysts cautioned that the rebound rests on a deal that has not yet been signed, and that any breakdown in the talks — or a renewed exchange of strikes in the Gulf — could just as quickly send oil higher and stocks lower again. For now, though, the message from trading desks was unmistakable: after weeks of bracing for a wider war, markets are betting on peace.
Originally reported by CNBC.