After Trump agreed to a ceasefire with Iran, Canadian TSX stock index futures soared.

Investing.com - On Wednesday, after U.S. President Donald Trump announced that he agreed to a temporary ceasefire deal with Iran, futures linked to Canada’s major stock indexes surged sharply.

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As of 6:56 a.m. Eastern Time (10:56 a.m. Greenwich Mean Time), the Standard & Poor’s/TSX 60 Index benchmark futures contract was up 43 points, a gain of 2.2%.

Spot gold, which has recently been sluggish, jumped sharply, providing support for an index with a high weighting in the precious metal, offsetting a decline in crude oil prices. Analysts said they will closely watch oil shipments through the Strait of Hormuz once the agreement is reached.

U.S. Futures Soar

U.S. stock index futures surged. Late Tuesday, Trump said he had agreed to pause military action against Iran for two weeks—a decision made within hours of Tehran’s reopening deadline for the Strait of Hormuz at 8:00 p.m. Eastern Time. Otherwise, Iran would face devastating strikes against its critical infrastructure. Trump had earlier threatened to destroy all of Iran’s “civilized” holdings if his demands were not met.

The president said the United States has achieved its core military objectives and added that Iran has put forward a multi-point proposal that could serve as a foundation for a broader agreement.

Iran also sent signals of a conditional de-escalation, saying that during the ceasefire, safe passage through the Strait of Hormuz would be possible as long as hostilities are halted and ships coordinate with Iranian authorities.

This breakthrough came after diplomatic efforts at the last moment, with Pakistan playing a key mediating role in urging both sides to step back from the brink of escalation.

Oil Prices Plash

Meanwhile, hopes that shipping traffic through the Strait of Hormuz will recover pushed oil prices down again, slipping back below $100 a barrel.

On Wednesday, Trump posted on social media that the U.S. will help ease traffic congestion in the Strait of Hormuz, said it will remain confident in the ceasefire, and described the development as “an important day for world peace.”

The Strait of Hormuz handles roughly 20% of global oil shipments, but tanker traffic through the strait has effectively been shut for weeks due to Iran’s threats to attack vessels attempting to transit the waterway. According to media reports, Iran has also been formally putting in place a system to charge certain ships a fee for passage through the strait.

There has been growing concern that a prolonged closure of the strait could affect critical energy supplies for countries around the world. Analysts said investors will closely watch supply flow through the strait, and there have been reports that some ships are still uncertain whether it is safe to transit the passage.

Neil Shearing, chief economist at Capital Economics, said in a report: “For markets, the most important issue remains the situation in the Strait of Hormuz. The framework appears to allow tankers to pass through fully, but the details of the terms are still unclear.”

Gold Rockets Higher

Gold prices rose to a near three-week high as the ceasefire agreement prompted a reassessment of near-term risks.

As of 5:46 a.m. Eastern Time (9:46 a.m. Greenwich Mean Time), spot gold was up 1.6% to $4,778.95 per ounce, after previously touching the highest level since March 19. U.S. gold futures for June delivery rose 2.6% to $4,807.34 per ounce.

Despite gold traditionally being viewed as a safe-haven asset, during conflicts it has largely performed poorly. A surge in oil prices has raised inflation concerns and increased expectations that the Federal Reserve could keep interest rates high for longer—which is a potential headwind for gold, a non-yielding asset.

By contrast, investors flocked to the U.S. dollar, further weakening gold’s appeal, because a stronger dollar makes it more expensive for overseas buyers to purchase gold. But with new hopes that hostilities in the Middle East have ended, an index tracking the dollar against a basket of currencies has fallen by more than 1% recently.

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