LONDON / NEW YORK — Global financial markets witnessed a dramatic “relief rally” on Wednesday as oil prices plummeted and stocks soared following the announcement of a two-week ceasefire between the United States and Iran. The truce, brokered by Pakistan just hours before a devastating U.S. bombing campaign was set to begin, has reignited hopes for the restoration of energy flows through the critical Strait of Hormuz.
Brent crude fell below the $100 mark after Washington and Tehran reached a two-week ceasefire deal expected to pause the US-Israeli attacks, contingent on Iran reopening the Strait of Hormuz.
Prices dropped sharply, with futures tumbling by as much as 16% to around $91.70 per… pic.twitter.com/P677mkzOLU
— The Daily News (@DailyNewsJustIn) April 8, 2026
Market Snapshot: The Ceasefire Dividend
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Crude Collapse: Brent crude futures slid 13% to $94.71, while U.S. WTI dived 15% to $96.31 per barrel, marking the first time prices have dropped below the $100 threshold since the conflict escalated.
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Equity Surge: European futures leaped over 5%, while Japan’s Nikkei and South Korea’s KOSPI jumped 5% and 6% respectively, with the latter briefly triggering a trading halt.
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Safe-Haven Retreat: The U.S. Dollar Index eased to a one-month low of 98.835 as investors moved capital out of “panic assets” and back into riskier equities.
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Bond Rally: U.S. 10-year Treasury yields dropped to 4.24%, their lowest since mid-March, as traders began betting on potential interest rate cuts later this year.
Pakistan stopped a war. Both sides said thank you. 🇵🇰
Oil -16%. S&P +2.5%. KSE-100 hit upper circuit breaker this morning, now trading at 164,000+.
Pakistan’s diplomacy moved global markets.#Pakistan #KSE100 #PSXInvesting #PakistanZindabad pic.twitter.com/yC5bJpmpmW— Ali Shah (@AliShahReinvent) April 8, 2026
From ‘Hell’ to a Green Screen
The market reaction was a direct response to President Donald Trump’s abrupt reversal on Truth Social. Only hours after warning that “a whole civilization will die tonight,” the U.S. President agreed to a 14-day suspension of hostilities following conversations with Pakistan’s leadership.
The two-week window is particularly significant for traders because it exceeds the original 10-day timeline initially set for U.S. military objectives. “Markets have been given the green light to rally,” said Matt Simpson, senior market analyst at StoneX. “For now, the worst of the conflict may be behind us.”
The Strait of Hormuz Factor
The primary driver of the oil price crash is the anticipated reopening of the Strait of Hormuz. Since the US-Israeli strikes on February 28, the waterway—which handles 20% of the world’s energy—has been a no-go zone, sending global inflation into a tailspin. With Iran agreeing to “safe passage” coordinated by its armed forces for the next 14 days, the “war premium” on energy has evaporated almost overnight.
However, some analysts remain cautious. “It would have to be a lasting peace to truly change the risk profile,” warned Martin Whetton of Westpac. While prices are down, they remain well above pre-war levels, and the underlying causes of the conflict remain unresolved.
Impact on Central Banks
The ceasefire has provided much-needed breathing room for global central banks.
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Federal Reserve: The prospect of rate cuts is back on the table now that the immediate energy shock has softened.
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New Zealand (RBNZ): Kept rates unchanged today, signaling a “wait and see” approach to assess the war’s long-term fallout.
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Pakistan: Domestically, the KSE-100 mirrored the global trend, surging over 3,100 points as the “Islamabad Bridge” diplomacy cemented the country’s role as a primary stabilizer in the region.
A Skeptical Horizon
Despite the euphoria, currency strategists at the Commonwealth Bank of Australia warn that the war could still “run into June,” suggesting the current dollar losses and oil dips might be short-lived if the April 10 Islamabad Talks fail to produce a permanent settlement.
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