The US, Iran, and Israel agree to a temporary ceasefire, European stock markets soar

Investing.com - Wednesday, European stocks surged sharply, mirroring gains in Asian markets and U.S. stock index futures. Investors were relieved after the United States and Iran reached a temporary ceasefire agreement lasting more than a month of war.

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As of 03:10 a.m. Eastern Time (07:10 a.m. Greenwich Mean Time), the pan-European Stoxx 600 index jumped 3.7%, the German DAX rose 4.9%, the French CAC 40 gained 3.6%, and the UK FTSE 100 climbed 2.5%.

Washington and Tehran reached the agreement late Tuesday evening, after U.S. President Donald Trump threatened that he would destroy the country’s entire “civilization” if Iran did not open the Strait of Hormuz.

Trump said in a social media post that the agreement was reached after conversations with Pakistani leaders. Pakistan has recently been acting as a mediator between the United States and Iran. After Pakistan urged Trump to give up the Tuesday 8:00 p.m. Eastern Time deadline, the president promised to pause attacks on Iran for two weeks.

Iran’s foreign minister Abbas Araghchi also said Tehran would “halt its defensive actions,” and would make possible “safe passage” through the Strait of Hormuz, provided that shipping is coordinated with the Iranian armed forces. Pakistan’s Prime Minister Shehbaz Sharif invited U.S. and Iranian officials to hold talks on Friday in Islamabad.

In a statement, Israeli Prime Minister Benjamin Netanyahu’s office said Israel supports Trump’s decision. Israel launched attacks together with the United States against Iran in late February. However, the statement did not mention Lebanon, where Hezbollah—an Iran-aligned group—has been a target of Israel’s strikes.

Even so, the agreement leaves some room to hammer out a long-term peace deal between the two sides, thereby stopping the war. Beyond the military and humanitarian costs, many analysts worry that the war could intensify inflationary pressures and drag down the global economy.

Global oil benchmark Brent crude futures fell sharply, dipping below the $100 per barrel threshold. But the contract is still far above pre-war levels; earlier, it surged significantly as traders worried that the Strait of Hormuz might remain effectively closed for weeks.

People have long feared that a prolonged closure of the Strait of Hormuz could affect key energy supplies for countries worldwide. The Strait of Hormuz is a narrow waterway off Iran’s southern coast, through which roughly one-fifth of the world’s oil is shipped.

On Wednesday, stock markets in multiple Asian countries jumped sharply, many of which are heavy importers of oil and natural gas from the Strait of Hormuz. Europe also uses natural gas from the Persian Gulf, especially Qatar, whose energy infrastructure has become a target of Iranian strikes.

This article was translated with the assistance of artificial intelligence. For more information, please see our Terms of Use.