Calm returns to markets as fragile ceasefire starts

The ceasefire between Israel and Iran continued to calm global markets on Wednesday, as investors choose to bank on the idea that the worst of the conflict was over.

The global stock market rally on Tuesday that immediately followed news of the ceasefire leveled off on Wednesday in early trading, as did the previously fast-changing price of oil.

The Reuters news agency said both were calmed by the prospect of the Strait of Hormuz and Iran's oil infrastructure in general remaining fully operational.

Oil prices went up by almost 2 percent in early trading on Wednesday, influenced in part by the possibility of the US Federal Reserve cutting interest rates at some time in the near future.

The relative stability followed a difficult week for global oil markets, with prices surging on the weekend after US strikes against Iranian nuclear facilities, due to investors' fears that the attack would trigger a disruption in the supply of crude oil.

But the markets swung the other way when the White House announced the ceasefire between Teheran and Tel Aviv, falling by 5 percent on Tuesday.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, told Reuters: "Oil prices remain volatile with Brent crude heading slightly higher on the speculation about hostilities breaking out again. It's trading above $68 a barrel, also gaining strength from industry data indicating supplies are tighter in the market."

Priyanka Sachdeva, a senior market analyst at Phillip Nova, told the BBC: "If the ceasefire is followed as announced, investors might expect the return to normalcy in oil … the extent to which Israel and Iran adhere to the recently announced ceasefire conditions will play a significant role in determining oil prices."

Gold prices also edged higher on Wednesday after having been at a two-week low that was in stark contrast to its recent performance, with the value of gold having surged by more than 25 percent since the start of the year as investors sought safe havens amid geopolitical uncertainty.

Wholesale UK gas prices fell by 17 percent on Tuesday after rising fast earlier in the day after it became clear Qatar, a major supplier of liquefied natural gas, would likely be able to continue using the Strait of Hormuz.

The FTSE 100 index and European stocks in general were higher on Wednesday after the ceasefire looked to be holding. The FTSE 100, London's benchmark index, was 0.3 percent higher in early trading, while Germany's DAX was unchanged, and CAC in France was 0.2 percent up.

US stock futures were little changed amid caution over the ceasefire and comments from Federal Reserve Chair Jerome Powell that interest rates may not yet be ready for a cut.

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