Representative image (AI-generated)

As the Iran-US ceasefire kicks in, global markets are witnessing a sharp shift across multiple sectors.US President Donald Trump announced a temporary two-week suspension of planned military strikes on Iran, linking the move to Iran’s willingness to reopen the Strait of Hormuz and engage in negotiations.Crude prices, which had surged above $100 per barrel in March due to the war-induced blockage, fell sharply following the announcement. Here’s a detailed look at how the ceasefire is impacting markets and the economy worldwide.

Strait of Hormuz: Shipping traffic remains cautious

Iran is now attempting to formalise its control over the Strait as part of a broader geopolitical strategy following weeks of conflict.As part of its proposals linked to a potential long-term peace deal, Tehran wants the authority to charge transit fees for ships passing through the Strait of Hormuz.According to officials, these charges would not be fixed but could vary depending on the type of vessel, the nature of its cargo and prevailing conditions.Iran is also working on a framework that could require ships to obtain permits or licences before being allowed to pass, in coordination with regional mechanisms that may involve Oman, Reuters reported.Despite the ceasefire, shipping activity in the Strait of Hormuz has remained limited after the announcement. Analysts warn that vessels and insurers are unlikely to resume normal traffic until they see sustained safety signals, CNN reported. “The ceasefire is a necessary first step, but it does not mean commercial shipping immediately normalizes through the international traffic lanes in the Strait,” said Charlie Brown, Senior Advisor at Dark Fleet Tracking and a former US Navy officer.Shipowners are waiting for guidance from naval security channels, flag states and marine war-risk insurers before sending vessels back into the strait.Since the start of the conflict, Iran has attacked at least 19 vessels near the strait, choking crude supplies to global markets. Iran’s foreign minister has said that “safe passage through the Strait of Hormuz will be possible via coordination with Iran’s Armed Forces.”

Oil prices plunge below $100

The temporary truce and partial reopening of the Strait of Hormuz provided immediate relief to the oil market. Brent crude futures dropped 13.6% to $94.43 per barrel, while WTI crude fell over 14% to $96.82 per barrel in early hours of trade.This marks the steepest decline in nearly six years, reversing the sharp gains that had pushed oil past $100 in March.Analysts caution that while the ceasefire reduces immediate supply risks, long-term uncertainty remains. “Even with a peace deal, Iran may be emboldened to threaten the Strait more frequently in the future, and the market will price in heightened risk going forward,” said MST Marquee analyst Saul Kavonic.

Global equity markets rally

Asian equities surged in response to the ceasefire. Japan’s Nikkei 225 rose 5% to 56,106.18, South Korea’s Kospi jumped 5.9% to 5,819.97 and Australia’s S&P/ASX 200 climbed 2.6% to 8,952.30. Hong Kong’s Hang Seng gained 2.6%, while the Shanghai Composite added 1.7%.Wall Street futures indicate strong openings following mixed performance in the previous session. Investors welcomed the ceasefire as a relief measure, easing fears of further geopolitical escalation affecting global trade and energy flows.

Stock markets surge

Stock markets in India opened in green, led by gains in energy-linked and large-cap stocks. The BSE Sensex rose 2,822 points (3.78%) to 77,441.81, while the Nifty50 climbed 838 points (3.63%) to 23,962.55 as of 12.15 pm.The rally added over Rs 12.9 lakh crore to the total market capitalisation of listed companies, bringing it to around Rs 442 lakh crore.Dr VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said, “The 2-week ceasefire between the US and Iran has dramatically altered the near-term market scenario. The crash in Brent crude to $95 following the ceasefire will again turn the market bullish. This ceasefire, particularly the agreed reopening of Hormuz Strait, will embolden the bulls to charge again, aided by the fair market valuations.”Shares of IndiGo surged 10%, while major gainers included L&T, Bajaj Finance, UltraTech Cement, Maruti Suzuki and Mahindra & Mahindra, all rising between 5% and 7%. Midcap and smallcap indices also rose more than 3%, reflecting broad-based optimism.

India’s GDP and monetary policy outlook

The RBI’s Monetary Policy Committee (MPC) kept the repo rate unchanged at 5.25%, maintaining a neutral stance amid global uncertainties. Governor Sanjay Malhotra highlighted that while India’s economy remains on strong footing, geopolitical tensions in West Asia pose risks to growth and inflation.Real GDP growth for the year is projected at 6.9%, with steady quarterly trends. Inflation remains moderate, with the Consumer Price Index expected at 4.6% for the year. Malhotra highlighted that lower crude prices following the ceasefire would help stabilise inflation, while the economy’s fundamentals remain robust enough to absorb global shocks.The two-week Iran-US ceasefire has provided short-term relief to oil markets, equity indices and bond markets worldwide.While cautious optimism prevails, investors are watching closely to see whether shipping through the Strait of Hormuz normalises and whether the temporary truce can pave the way for a more durable peace.