Oil plunges, stocks jumps

AFP | London

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Oil prices plunged more than 10% yesterday after Iran said the Strait of Hormuz would be “completely open” for the rest of the ceasefire with the United States, and stock markets surged.

Both the benchmark international contract Brent and its US equivalent WTI fell below $90 per barrel.

“This news is having an immediate impact on markets,” said Kathleen Brooks, research director at XTB.

Wall Street’s main stock indices jumped at the opening bell, with both the S&P 500 and the Nasdaq Composite building on record highs struck the previous evening.

“This is the biggest development so far during the ceasefire, and it gives hope that the war will end soon, and supply chains will return to some normality,” Brooks said.

It was not clear whether Iran’s Foreign Minister Abbas Araghchi was speaking of the 10-day truce agreed by Lebanon and Israel that went into effect at midnight or an earlier two-week truce between Iran and the United States that began on April 8.

French President Emmanuel Macron and UK Prime Minister Keir Starmer were chairing a meeting of allies Friday to consider sending a multinational force to ensure free-flowing trade in the Strait of Hormuz once the conflict ends.

David Morrison at Trade Nation noted that the speed and the magnitude of the rebound of the S&P 500 -- nearly 12% in just over two weeks -- was reinforcing the rally.

European stocks were higher in afternoon trading, with both Frankfurt and Paris gaining 2%.

Asian stock markets mostly closed lower, with Tokyo among the biggest losers after reaching a record high Thursday, and Taiwan’s TAIEX index dropped after hitting a market capitalisation of $4.14 trillion.

That put the index ahead of London’s benchmark FTSE 100 and made the TAIEX the world’s seventh-biggest index by value, according to Bloomberg data.