Oil price fell, U.S. dollar weakens
The Iranian side declared that it would allow passage through the route, but under coordination with Iranian armed forces. The de‑escalation of tensions has a significant impact on global financial markets. Stock indices are rising sharply, oil prices fell, and the U.S. dollar is weakening. Optimistic sentiment is also visible on the Warsaw trading floor, where the WIG20 rises more than 3% to the highest level of the current rally.
Turn in the current geopolitical situation
The ceasefire announced by Donald Trump in the conflict with Iran represents a significant turn in the current geopolitical situation. Thanks to this, both sides avoided escalation of the conflict. The U.S. President also threatened on Tuesday that he would attack Iranian power plants and bridges, and Iran responded that it would strike the energy infrastructure of regional states. The two‑week truce is meant to give time for further negotiations between the U.S. and Iran.
Donald Trump stated that Iranians presented a plan that could serve as a basis for further talks. The ceasefire includes halting military operations and limiting military activity in key areas, but we emphasize that it is not a final truce and in the coming days and weeks investor sentiment will depend on progress in negotiations between Washington and Tehran.
USD depreciation helps precious metals
From the perspective of financial markets, this information provides temporary relief and reduces the premium for geopolitical risk, which was clearly visible in recent weeks. This morning, during the Asian session, indices rose sharply. Japan’s Nikkei gained more than 5%, and South Korea’s Kospi rose more than 7%. The same pattern is seen in Europe, where the DAX and CAC40 rise before noon by 4.5% and 4% respectively.
On the Warsaw trading floor the biggest companies drive the strongest gains: the WIG20 rises more than 3%, setting a new peak of the current trend at over 3,530 points. The lower risk of supply disruptions of oil from the Persian Gulf region, which is one of the key global energy hubs, caused a crash in commodity prices.
With the reopening of the Strait of Hormuz, Brent fell more than 13% to 94.6 USD per barrel, and WTI oil fell more than 15% to 95.5 USD. The decline in oil prices reduces the risk of a sustained rise in inflation, and consequently of interest‑rate hikes by central banks, resulting in a decline in Treasury yields. The yield on U.S. 10‑year Treasury notes fell below 4.23%, and Polish bonds to 5.55%.
In the foreign‑exchange market, there is a reversal from the U.S. currency, which, thanks to its safe‑haven status since the outbreak of the conflict, experienced a clear appreciation. Today the EUR/USD pair falls below 1.17, and USD/PLN falls to about 3.65. USD depreciation helps precious metals, causing gold to rise to over 4,800 USD per ounce.
In the coming days and weeks the premium for geopolitical risk on financial markets may be lower, but we emphasize that volatility may still persist, and only the announcement of a final peace could change the market trends observed in recent weeks.
