Ceasefire Euphoria: Dow Futures Surge 1,000 Points, Oil Crashes Below $100 as Iran Agrees to Reopen Hormuz

Georgi Kuzmanov Senior Equity Analyst & Founder

Wall Street is set for its biggest opening rally since March 31 after President Donald Trump agreed to a two-week ceasefire with Iran just 90 minutes before his 8 PM ET deadline to bomb the country’s bridges and power plants. The deal — brokered in an eleventh-hour intervention by Pakistan’s Prime Minister Shehbaz Sharif — includes a conditional reopening of the Strait of Hormuz, the critical waterway whose closure has strangled global energy markets for over five weeks.

Dow futures are surging more than 1,000 points (+2.29%). S&P 500 futures are up +2.52%. Nasdaq 100 futures lead at +3.2%. But the real story is oil: WTI crude has crashed more than 14% to approximately $97 per barrel — falling below $100 for the first time since early March — while Brent has plunged over 12% to around $95. This is the largest single-session oil decline since the OPEC production war of 2020.

Asia erupted overnight. South Korea’s Kospi surged +5.8% with Samsung and SK Hynix jumping 7% and 9.6% respectively. Japan’s Nikkei 225 soared +4.95%. Hong Kong’s Hang Seng rallied +2.56% as it returned from holiday. European futures point to a massive open — the DAX is called +5% higher, Italy’s FTSE MIB +5.3%, and the CAC 40 +4.5%. This is a global risk-on event, but the caveats are enormous.

Pre-Market Snapshot

Overnight Developments

The Ceasefire: How It Happened

The timeline was extraordinary even by Trump-era standards. At approximately 6:15 PM ET Tuesday — less than two hours before his self-imposed deadline — Trump posted on Truth Social: “I agree to suspend the bombing and attack of Iran for a period of two weeks.” The decision came after phone calls with Pakistan’s PM Sharif and Army Chief General Asim Munir, who had spent the afternoon lobbying both sides.

The deal is built on Iran’s 10-point proposal, which Trump described as “a workable basis on which to negotiate.” Iran’s Foreign Minister Abbas Araghchi confirmed that Tehran will allow safe passage through the Strait of Hormuz for two weeks “via coordination with Iran’s Armed Forces and with due consideration of technical limitations” — caveats that give Iran significant room to define compliance on its own terms.

Both Sides Claim Victory

In a pattern that echoes countless Middle East ceasefires before it, both the U.S. and Iran are declaring triumph. Trump called it a “complete and absolute victory” in a phone interview with AFP, claiming that Operation “Epic Fury” achieved its military objectives in 38 days. White House spokeswoman Karoline Leavitt stated that “the success of our military created maximum leverage.”

Iran’s Supreme National Security Council, meanwhile, declared that “the U.S. has accepted these principles as the basis for negotiations and has surrendered to the will of the Iranian people.” Iran-backed militias in Iraq announced they would suspend operations. On the streets of Tehran, crowds gathered in the early hours — some celebrating, others burning American and Israeli flags. The BBC reports the reaction inside Iran is decidedly mixed: relief that power plants won’t be bombed, but opponents of the regime now face a government that is “angrier and more emboldened.”

The Complication: Missiles Are Still Flying

Within hours of the ceasefire announcement, the deal was already being tested. The Israeli military reported ballistic missile attacks from Iran early Wednesday, with warnings issued in central and northern Israel. The UAE activated air defenses against incoming missiles and drones. Saudi Arabia, Kuwait, Bahrain, and Qatar all issued alerts. This raises the most pressing question for markets: can this fragile ceasefire hold?

Global Markets

Asia — A Massive Relief Rally

Asian markets delivered their strongest session in months. South Korea’s Kospi surged 5.8% — the standout performer — driven by semiconductor heavyweights Samsung Electronics (+7.12%) and SK Hynix (+9.61%) as traders priced in easing energy costs and restored supply chains. Japan’s Nikkei 225 soared 4.95% with the Topix up 3.1%. Australia’s ASX 200 gained 2.7%. Hong Kong’s Hang Seng advanced 2.56% as it reopened from holiday, and mainland China’s CSI 300 rose 1.95%.

India’s Reserve Bank held its benchmark policy rate unchanged on Wednesday, citing Iran-driven inflation risks that persist regardless of the ceasefire. That decision — keeping rates on hold even as the rest of Asia celebrated — is a sober reminder that the inflation damage from five weeks of $100+ oil cannot be unwound overnight.

Europe — Called Sharply Higher

European futures are pointing to the biggest opening rally since March 31 when Trump first hinted at ending the war. Germany’s DAX is indicated +5% higher, Italy’s FTSE MIB +5.3%, France’s CAC 40 +4.5%, and the UK’s FTSE 100 +3%. Shell reports earnings Wednesday morning and will be a key barometer for how the energy sector recalibrates in a sub-$100 oil world. Airlines, cruise lines, and consumer discretionary names are expected to lead the rally as fuel costs plummet.

Macro & Rates

The Treasury market is telling a nuanced story that differs from the unbridled equity euphoria. The 10-year yield has fallen 9 basis points to 4.253%, with the 20-year down 9 bps to 4.839% and the 30-year off 7 bps to 4.851%. Normally, a massive risk-on rally would push yields higher as investors sell safe havens. Instead, Treasuries are rallying alongside equities — a signal that the bond market is pricing in both lower oil-driven inflation and a slower growth trajectory baked in by five weeks of the conflict.

Gold is also defying the textbook risk-on playbook. Spot gold has surged +2.2% to $4,803.83, while gold futures jumped over 3% to $4,835.90. As Billy Leung of Global X ETFs told CNBC: “Relief and hedging can coexist. Investors are adding risk tactically but still holding or even adding to defensives as protection against reversal.” The fact that gold is hitting new highs during a ceasefire rally tells you everything about how much trust the market has in this deal lasting.

Corporate News

Delta Air Lines Reports Pre-Market

Delta Air Lines is the most consequential earnings report of the week. Jet fuel costs have surged during the Iran war, and airlines have been cutting routes and raising fares. The ceasefire changes the calculus dramatically — if oil stays below $100, Delta’s forward guidance could be significantly more optimistic than the Q1 results themselves. Watch for commentary on bookings, fuel hedging positions, and whether management reinstates any suspended routes.

Levi Strauss Beats, Raises Guidance

In a bright spot from Tuesday evening, Levi Strauss posted a Q1 earnings beat of $0.42 per share vs. the $0.37 consensus. Revenue of $1.74 billion topped the $1.65 billion estimate. The company raised full-year guidance to $1.42–$1.48 EPS. Shares jumped 5% in after-hours trading. The beat suggests the consumer remains more resilient than feared despite energy cost pressures.

Shell Earnings — The Energy Recalibration

Shell reports in Europe this morning and faces a unique challenge: reporting blockbuster results driven by elevated oil prices while simultaneously facing a market that just repriced oil 14% lower in a single session. The stock may rally on results but face headwinds from the forward-looking implications of sub-$100 crude.

China’s Quiet Role

Trump hinted in his AFP interview that China helped convince Iran to come to the table. “I hear that, yes,” he said when asked if Beijing played a role. The comment comes ahead of Trump’s planned May visit to Beijing and a meeting with President Xi Jinping. If China indeed helped broker the deal, it signals a rare alignment of U.S.-China interests — one that could have broader implications for trade and technology relations.

Premarket Movers

Economic Calendar

The FOMC minutes at 2 PM will be closely scrutinized for any discussion of oil-driven inflation scenarios. These are the minutes from the March meeting when the Fed held rates steady, and they were drafted before the ceasefire. The market will parse every sentence for clues about how the Fed is thinking about the stagflation trap that Goolsbee warned about yesterday.

The AlphaEdge Prediction

Base Case (60% probability): The S&P 500 opens sharply higher, gaining 2.0–2.5% in the first hour before settling back as traders take profits and reassess the ceasefire’s durability. Predicted range: 6,720–6,810. Energy stocks lag while airlines, consumer discretionary, and tech lead. The VIX crashes to 20–21 from yesterday’s 25.83 close. Oil stabilizes around $95–100.

Bull Case (25% probability): The rally extends throughout the session as no ceasefire violations are reported, the Strait of Hormuz begins reopening, and Delta’s earnings include optimistic forward guidance citing falling fuel costs. S&P 500 pushes above 6,850 — potentially challenging the all-time high. Oil drops further toward $90 as shorts capitulate.

Bear Case (15% probability): The ceasefire collapses before the close. Additional missile strikes from Iran escalate into a broader confrontation. Israel, which has agreed to the ceasefire but explicitly stated it “does not include Lebanon,” launches its own operations. Oil reverses above $105 and the early gains evaporate. Watch the 2:15 PM FOMC minutes release as a potential catalyst for either direction.

Georgi Kuzmanov

Senior Equity Analyst & Founder at AlphaEdge. Columbia University MSFE (2011–2013). Covering equities, macro, and geopolitics for serious investors.