Headlines:

• Risk-on wave tides over markets as US, Iran agree to a two-week ceasefire
• US president Trump says will work closely with Iran amid “very productive” regime change
• Oil prices dive after US-Iran ceasefire agreement; focus turns to Friday’s negotiations
• The US Dollar sinks on the US-Iran ceasefire agreement
• The S&P 500 almost erases March losses after the US-Iran ceasefire agreement. What’s next?
• Silver looks to come up for air as market mood picks up on US-Iran ceasefire
• Eurozone February PPI -0.7% vs -0.7% m/m expected
• Eurozone February retail sales -0.2% vs -0.2% m/m expected
• Germany February industrial orders +0.9% vs +2.0% m/m expected
• Germany March construction PMI 48.0 vs 43.7 prior
• UK March construction PMI 45.6 vs 43.7 expected

Markets:

• WTI crude oil down 17% to $93.50
• European indices up over 4% with the DAX up 5% on the day
• S&P 500 futures up 2.8%
• USD drops across the board
• 10-year Treasury yields down 10 bps to 4.24%
• Gold up 2% to $4,797, Silver up 6% to $77.27

It takes two to tango but even if not exactly the case, markets are sensing relief and scope for more optimism after US president Trump announced a two-week ceasefire with Iran. The positive thing about this is at least the Iranian camp also confirmed the ceasefire. However, there are still some separation as to what negotiations will entail. The first round will take place in Islamabad on 10 April this week.

While Trump claims that the Strait of Hormuz will reopen and that Iran has agreed to most points on the 15-point peace proposal, there are still some question marks left to be answered. Iran seems to be only allowing for a partial reopening for now, with it being more limited in nature while they themselves put out a 10-point proposal instead.

We’ll have to wait and see for now. But in any case, risk optimism is back and markets are running away with it before needing to deal with those questions.

Oil prices are tumbling hard on the day with WTI crude dropping by over 17% to $93.50 currently. That sees oil poised for its largest one-day decline in dollar terms, if the losses – nearly $20 – hold through the day.

Meanwhile, equities are rallying hard with the mood music carrying over from Asia to Europe. Major indices in Europe are up over 4% across the board with the DAX keeping above 5% gains for now, rising to a one-month high and erasing more than half of the losses from last month already.

US futures are also surging higher, with S&P 500 futures up 2.8% and Nasdaq futures up 3.5% currently.

In other markets, the dollar is being sold off aggressively across the board with EUR/USD up 1% to 1.1705. Meanwhile, USD/JPY is down 0.9% to 158.10 while AUD/USD is up 1.2% to 0.7050 currently.

The drop in the dollar comes alongside bond yields with 10-year yields in the US down 10 bps to 4.24% on the day.

As for precious metals, the return of risk appetite sees both gold and silver rallying strongly as well today. Gold is up a little over 2% near $4,800 while silver is up over 6% to $77.27 currently.

It’s a massive risk relief rally for markets but the main question is, will we see both the US and Iran walk the walk after having talked the talk? Only time will tell.

This article was written by Justin Low at investinglive.com.