Oil prices plummet and stock markets soar after Trump's truce with Iran

Investors are breathing a sigh of relief after the new two-week ceasefire in the Middle East agreed between Tehran and Washington. Following the announcement, which includes "safe" transit through the Strait of Hormuz, commodity prices plummeted.

The idea of a truce, even a temporary one, immediately reduced fears of a prolonged closure of this maritime passage and further disruption to global energy flows. As a result, the price of oil, which has been acting as a market barometer since the attacks began on 28 February, plunged 16 per cent below the psychological barrier of 100 dollars, while the benchmark price of gas in Europe fell by 19 per cent.

Nevertheless, experts are cautious, noting that although crude oil prices are falling sharply today, they do not believe they will return to pre-conflict levels in the short term. "This will undoubtedly have a negative impact on inflation, at least for a few months - a fact that central banks will have to deal with," head of analysis at Link Securities Juan José Fernández-Figares says.

The market, however, is already adapting to expectations that lower oil prices will help curb inflation and revive economic growth. With the worst-case scenario ruled out after President Donald Trump went from threatening to send Iran back to the Stone Age to predicting a "golden age" in the region in just a few hours, European stock indices are posting gains of around five per cent.

In the case of the Ibex-35, the rally exceeded four per cent at the open, with IAG and steelmakers ArcelorMittal and Acerinox among the top performers. Meanwhile, Wall Street futures are pointing to more moderate gains of three per cent.

Stock markets are following the trend set by Asian exchanges overnight, where Japan's Nikkei rose by more than five per cent and South Korea's Kospi by six. "For markets, a ceasefire significantly reduces the risk of a short-term escalation. This reduction in extreme risk is usually enough to trigger a rapid recovery, even if long-term uncertainties persist," emerging markets economist at Aberdeen Investments Michael Langham says.

The truce has also boosted gold, which is up two per cent to 4,800 dollars an ounce. The precious metal, which hasn't really acted as a safe-haven asset during this crisis, usually benefits in a lower interest rate environment like the one created by the end of the conflict. Meanwhile, silver is up 4.5 per cent, surpassing 76 dollars an ounce. Expectations of interest rate cuts by the US Federal Reserve are driving up yields in the bond market.