Renewed optimism over a possible de-escalation in the Iran war, now in its fifth week, gave a strong boost to stock markets in Europe and Asia on Wednesday.
At the time of writing, the Euro Stoxx 50 is up over 1%, while the broader pan-European Stoxx 600 is around 2.5% higher.
In London, the FTSE 100 has risen roughly 0.8% with Germany's DAX 30 and France's CAC 40 making equal moves to the upside. Italy’s FTSE MIB has jumped the most and is 1.7% higher.
During a press gaggle at the White House on Tuesday, US President Donald Trump stated that the country would "probably" stop attacks on Iran within two to three weeks "'whether we have a deal or not".
Following Trump's comments, the front month future contracts for oil also saw a sharp decline, with Brent crude and WTI both trading around 4% lower and below $100 a barrel.
Trump also stressed that the US would “not have anything to do with” what happens next in the Strait of Hormuz.
Despite the relief, markets are eagerly anticipating Trump's address to the nation about the conflict, which will occur overnight on Wednesday, according to the White House Press Secretary.
Asian shares also rose sharply on Wednesday after Trump's statement.
At the time of writing, South Korea’s Kospi has recovered losses from earlier this week, surging over 8%, while Tokyo’s Nikkei 225 rose more than 2%.
A survey by Japan’s central bank released on Wednesday showed that business sentiment among major manufacturers had improved despite concerns over the Iran war.
Hong Kong’s Hang Seng index is also over 2% higher, while the Shanghai Composite has jumped around 1.5%. Additionally, India’s Sensex rose roughly 2%, Australia’s ASX 200 is up 1% and Taiwan’s Taiex climbed more than 4%.
“De-escalation hopes have given markets a lift, but we think the effects of the war would, in many cases, persist even if it were to end soon,” said Thomas Mathews, head of markets for Asia Pacific at Capital Economics, in a research note on Wednesday.
US futures are also all trading between 0.7% and 1.2% higher.
The move comes after US stocks recorded their strongest day in almost a year on Tuesday, when the S&P 500 rose 2.9%, its largest gain since May.
The Dow Jones Industrial Average climbed 2.5%, while the Nasdaq jumped 3.8%.
“It’s worth considering how markets might respond if the war were to end very soon. Do markets have further to recover if sentiment continues to improve? The answer is almost certainly yes,” Mathews added.
In other trading, gold rose is up 1.4% trading at around $4,730 while silver is down roughly 1% to $74.3 an ounce.
