LONDON, UK – Global financial markets delivered a fragmented performance on Wednesday, as a last-minute announcement from US President Donald Trump extending a ceasefire with Iran left investors treading carefully while waiting for clarity on whether stalled peace negotiations will restart. Despite the ceasefire extension, the critical Strait of Hormuz – a key chokepoint for 20% of the world’s daily oil transit – remains blocked for Gulf energy shipments, keeping traders on high alert for a sudden resumption of armed hostilities. This uncertainty comes even as major US stock benchmarks have rebounded to hit record highs after erasing all losses triggered by the outbreak of the Middle East conflict in late February.
Market analysts broadly note high market expectations that both the Trump administration and Iranian leadership are motivated to end the conflict, which has already sent global oil and natural gas prices soaring and put tangible downward pressure on projected worldwide economic growth. Beyond geopolitical tensions, two key factors have propped up investor confidence in recent weeks: stronger-than-expected quarterly earnings from major corporations, and unwavering market enthusiasm for artificial intelligence innovation. Dozens of leading blue-chip companies have outperformed analyst forecasts, while a spate of multi-billion dollar tech sector acquisitions has reinforced optimism that recent equity gains will be sustained.
On Wall Street, stocks pushed upward, with large-cap technology shares leading gains that pushed the Nasdaq Composite to a new all-time closing high, while the S&P 500 advanced to within a fraction of a point of its own record peak. “Equity investors seem convinced that the war will soon be over, or that it will have little effect on the US economy, even if energy prices remain relatively elevated,” explained David Morrison, senior market analyst at Trade Nation.
Performance across other major global equity benchmarks was far less upbeat. In Europe, Frankfurt and London stock indexes posted mild losses, while the Paris CAC 40 shed 1% on the day. Asian markets also ended the trading session with a split performance, mirroring the mixed risk sentiment across global trading floors.
With Hormuz oil shipments still offline, major net energy importing nations in Asia and Europe that rely heavily on Middle East crude are grappling with fresh inflationary pressures stemming from higher energy costs, a shift that threatens to derail already fragile post-pandemic economic growth. “The ceasefire extension hasn’t done much to calm nerves given that worries remain about the impact of the energy squeeze on the global economy,” said Susannah Streeter, chief investment strategist at Wealth Club.
Reflecting ongoing supply concerns, oil prices jumped sharply on Wednesday: Brent North Sea crude rose more than 3% to climb back above the $100 per barrel threshold, while West Texas Intermediate, the primary US oil benchmark, traded back above $90 per barrel.
Complicating the fragile ceasefire dynamic, maritime security agencies confirmed that Iranian gunboats carried out an attack on at least one civilian container ship in the Strait of Hormuz on Wednesday, just hours after Trump announced the extension of the ceasefire to give additional time for peace negotiations mediated by Pakistan. Trump confirmed that the existing US naval blockade of Iranian ports will remain in place throughout the mediated dialogue process.
“There is the inescapable view that, with the US and Iran not looking likely to start direct talks imminently, a resumption of hostilities is a distinct possibility,” said Chris Beauchamp, market analyst at online trading platform IG.
Away from geopolitics and energy markets, investors are closely watching proceedings on Capitol Hill, where the Senate is holding confirmation hearings for Kevin Warsh, Trump’s nominee to replace outgoing Federal Reserve Chair Jerome Powell, whose term expires in May. Trump has repeatedly criticized Powell for declining to cut interest rates more aggressively, and told CNBC on Tuesday that he would be disappointed if Warsh does not move quickly to lower borrowing costs, despite ongoing above-target inflation. During his first confirmation hearing, Warsh pushed back against White House pressure, telling lawmakers he would maintain the Fed’s long-standing independence from political pressure and would not be controlled by the executive branch.
In a fresh sign of the corporate world’s continued bullish outlook on AI, Elon Musk’s SpaceX announced Tuesday that it has formed a strategic partnership with AI coding startup Cursor, including an option to acquire the firm for $60 billion, marking one of the largest mega-deals centered on artificial intelligence in 2025.