European gas prices have fallen 20% since the ceasefire was announced, after nearly six weeks of war.

The European bellwether front-month gas contract on the Dutch TTF hub initially dropped to €42.50 per megawatt hour this morning, its lowest since 2 March, before rising slightly to €43.46 per megawatt hour.

Iran has agreed to reopen the strait of Hormuz, through which around a fifth of the world’s gas and oil passed prior to the war, assuming there are no more strikes from the US and Israel.

Henning Gloystein, managing director of energy and resources at the political risk consultancy Eurasia Group, said:

The first thing to see is whether ships can safely pass through the strait of Hormuz.

If they pass freely, it’s possible that Qatar starts repairs to its Ras Laffan facilities, but I don’t think they can ramp up production within the two-week ceasefire window.

The waterway has remained effectively closed since the US and Israel launched strikes on Tehran on 28 February. A retaliatory Iranian strike on Qatar’s Ras Laffan LNG (liquefied natural gas) hub on 18 March knocked out an estimated 17% of export capacity.

Yahdian Falah, senior portfolio manager at trading firm Trianel told the European energy market newswire Montel News:

This is a strong relief and could be the turning point for the global gas market to rebalance.

The ceasefire removes risk of further damage to infrastructure, while reopening the Strait of Hormuz will bring volumes back into the market.

However, “further elimination of risk premium” would be subject to evidence of increased traffic through the strait, he added.

ANZ bank analysts said in a note:

Even if shipping routes reopen, missing Qatari output cannot be replaced quickly, leaving the market to clear through higher prices, inventory drawdowns and demand rationing.

The FTSE 100 index has risen to the highest level since the Tuesday after the US and Israel started attacking Iran.

The UK’s benchmark index rose as high as 10,655.92 this morning, and is now trading 2.4% higher at 10,603, up 253 points. This is the highest since 3 March, the fourth day of the war.

Stock markets in the rest of Europe have jumped even more. Germany’s Dax soared 5.2% to 24,118, up 1,194 points. France’s CAC jumped 4.45% to 8,260, up 352 points. Italy’s FTSE MiB has gained 3.5% to 47,016, up 1,601 points. Spain’s Ibex climbed 3.5%, or 608 points to 18,053.

Matt Britzman, senior equity analyst at Hargreaves Lansdown said the ceasefire gives Donald Trump “a clear offramp and lowers the immediate risk of further escalation”.

The FTSE 100 has opened 2% higher, while US futures are pointing to an even larger jump when markets open later this afternoon. The S&P 500 notched its fifth consecutive positive session last night, with the index now on track to record a six-day winning streak if it can hold on to pre-market gains, something not seen since October 2025.

Oil prices have moved sharply lower as the ceasefire agreement marks the first meaningful step toward a potential resolution. News that all parties are now working toward reopening the Strait of Hormuz is another clear positive for market sentiment, even if energy markets remain cautious. There is still work to be done, though, and oil prices will likely remain elevated and choppy until there is a more permanent resolution. The return of free-flowing traffic through the Strait of Hormuz, without any Iranian tolls or controls, feels essential if oil prices are going to start trending back toward levels we saw before the conflict began.

Interest rate expectations have shifted slightly following the ceasefire, bringing markets back toward the view that further US tightening is off the table. Investors are now becoming more comfortable, tentatively pricing in the potential for rate cuts to resume toward the end of this year or into early 2027.

In the UK, markets are still attaching some probability to another hike, although conviction has faded meaningfully in recent sessions. We still see rate hikes as unlikely, given lingering growth concerns, with a holding pattern more probable for now. Further moves in this direction, and perhaps an eventual return to expectations of rate cuts, would be supportive of both stock markets and gold.

The Danish shipping giant Maersk has issued a cautious statement, saying the two-week ceasefire between the US and Iran including the temporary reopening of the strait of Hormuz does not yet provide full maritime certainty.

The war that began with US-Israeli strikes on Iran on 28 February, followed by Iranian attacks across the region and Tehran’s effective closure of the strait, has brought shipping in the Gulf to a near standstill, disrupting oil, gas and fertiliser shipments and rippling across global supply chains.

Maersk said in a statement to Reuters:

Any decision to transit the strait of Hormuz will be based on continuous risk assessments, close monitoring of the security situation, and available guidance from relevant authorities and partners.

At this point, we take a cautious approach, and we are not making any changes to specific services.

And we’re off. The FTSE 100 index has jumped 273 points, or 2.6%, to 10624 in early trading.

There are only three fallers: oil companies BP and Shell, down by 8.3% and 7.3% respectively, and British Gas owner Centrica, down 3.5%.

Interest rate expectations have shifted dramatically, and government bond yields have fallen sharply.

Markets are now pricing in one interest rate hike from the Bank of England this year, probably by September.

Last week, investors were expecting two to three rate increases to rein in rising inflation.

UK government bond yields plummeted on news of the ceasefire as rate hike expectations receded, with the yield, or interest rate on the 10-year gilt down 18 basis points. The five-year yield dropped by 20 basis points.

Sterling has also risen sharply, by 0.9% against the dollar, to $1.3416.

Eurozone government bond yields also plunged as traders scaled back bets on future rate rises from the European Central Bank. Markets are now pricing in a 20% chance of a rate hike in April, compared with 60% on Tuesday, before the dramatic announcement of a US-Iran ceasefire overnight.

The yield, or interest rate, on Germany’s 10-year government bond fell 18 basis points to 2.91%.

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

Oil prices plunged more than 15% below $100 a barrel, Asian stocks surged and the dollar slumped after the US and Iran agreed a two-week conditional ceasefire on Tuesday evening, including a temporary reopening of the strait of Hormuz.

Investors breathed a sigh of relief, and Brent crude, the global oil benchmark, fell by more than $15 to $93.82 a barrel in early London trading. It reached a low of $91.7 a barrel in Asian trading – but remains much higher than before the US and Israel launched attacks on Tehran on 28 February, when it traded around $72 a barrel.

Japan’s benchmark Nikkei 225 jumped 5.45%, the Australian market climbed 2.55% and South Korea’s Kospi soared 7.7%. Elsewhere, Hong Kong’s Hang Seng surged 3%, while the Shenzhen Composite in China rose just over 4%.

European stock futures are pointing to a strong rally when markets open soon, with Germany’s Dax seen rising more than 5% and the UK’s FTSE 100 up nearly 3%.

The dollar fell more than 1% against a basket of major currencies. Spot gold rose 2.6% to $4,825 an ounce.

After a last-minute diplomatic intervention led by Pakistan, Donald Trump held off on his threat to bomb Iran “back to the stone ages” and wipe out “a whole civilization”.

With less than two hours to go until his ultimatum of 8pm Eastern time, the US president said a ceasefire agreement had been mediated through Pakistan, whose prime minister, Shehbaz Sharif, had requested the two-week peace in order to “allow diplomacy to run its course”.

Trump wrote in a post that “subject to the Islamic Republic of Iran agreeing to the COMPLETE, IMMEDIATE, and SAFE OPENING of the Strait of Hormuz, I agree to suspend the bombing and attack of Iran for a period of two weeks”.

Soon after, Iran’s national security council confirmed it had accepted a two-week ceasefire under the management of its military if attacks against Iran were halted. Tehran said peace negotiations with the US would begin in Islamabad on Friday.

However, there is still much uncertainty about the outcome of the talks, how the strait of Hormuz will be managed and what will happen to shipping after the two-week period ends.

Charu Chanana, chief investment strategist at Saxo Bank in Singapore, said:

Markets were positioned for a much worse outcome, so the relief rally in equities, FX, and oil makes sense. This is the market unwinding some of its disaster hedges.

The ceasefire does not resolve all the underlying risks. Investors still need clarity on whether hostilities truly stop, whether Hormuz remains reliably open, how quickly disrupted energy supply can recover, and whether the 10 April talks in Islamabad produce real progress.

For macro and rates, the worst immediate inflation shock has eased, so markets can start to put some rate cuts back on the table. But I would not assume they simply return to the exact same pricing as before the war, because shipping, insurance, and supply-chain disruptions may take longer to normalize.

Tactically, the Iran playbook may now be flipping. Relief-sensitive areas such as airlines, consumer discretionary, selected cyclicals, and broader risk assets could benefit if de-escalation holds. Structurally though, I still think investors should balance growth and AI exposure with energy, supply-chain resilience, hard assets, and national-security themes.

The Agenda

• 8.30am BST: Eurozone construction PMI for March

• 9.30am BST: UK construction PMI for March

• Noon BST: US mortgage applications