Oil prices dropped below $100 per barrel amid a ceasefire between the U.S. and Iran, sparking a sharp rally in equity and bond markets. While tensions persisted, particularly with Israeli strikes on Lebanon, investors reacted positively, with significant gains in global stock indices and a decrease in treasury yields.

Global Markets Surge as U.S. and Iran Agree to Ceasefire

In a dramatic turn of events, oil futures nosedived below the $100 mark after the United States and Iran agreed on a two-week ceasefire, igniting hopes for the revival of oil and gas flows through the crucial Strait of Hormuz.

Negotiated by Pakistan, the ceasefire was announced by President Donald Trump just hours before his ultimatum to Iran, demanding the reopening of the Strait under threat of retaliatory measures. Despite ongoing regional tensions, including Israeli strikes on Lebanon and Iran's attack on Saudi Arabia's pipeline, investors buoyed Wall Street indices to near-month highs.

Economists interpreted the market rally as a temporary relief from geopolitical risks, with treasury yields dropping amid expectations of Federal Reserve interest rate cuts. Meanwhile, the U.S. dollar dipped, and gold hit a near three-week peak, reflecting uncertainty over the provisional nature of the ceasefire.

(With inputs from agencies.)