Oil prices retreated to levels seen at the beginning of the conflict in Iran, while U.S. stocks surged to new highs on Friday following Iran’s announcement that the Strait of Hormuz is open for commercial oil tankers from the Persian Gulf. The S&P 500 soared by 1.2%, setting a fresh record and completing its third consecutive week of substantial gains. The Dow Jones Industrial Average initially surged by 1,100 points before settling at an 868-point increase (1.8%), and the Nasdaq Composite rose by 1.5%.
The Canadian S&P/TSX Composite Index closed up by 294.06 points at 34,346.29. The U.S. stock market has surged over 12% since its late March low, boosted by hopes of a favorable resolution between the United States and Iran amid the conflict.
Oil prices experienced a sharp decline after Iran’s foreign affairs minister announced the reopening of the Strait of Hormuz for commercial vessels on social media. U.S. crude plummeted by 9.4% to $82.59 per barrel, while Brent crude dropped by 9.1% to $90.38 per barrel. Despite the decrease, oil prices remain above pre-war levels, suggesting lingering caution in financial markets.
Although the Strait of Hormuz reopening brought optimism to Wall Street, concerns about vessel movement persist. Market expert Carsten Brzeski noted the positive impact on oil prices and consumers but questioned vessel traffic through the strait due to potential hesitance from insurers and shipowners.
Companies heavily reliant on fuel costs saw significant gains, with United Airlines surging by 7.1%. Cruise ship operators like Royal Caribbean Group and Carnival also witnessed notable increases. The positive start to the earnings reporting season for major U.S. firms further buoyed the stock market.
In international markets, European stock indexes surged in response to Iran’s announcement, with France’s CAC 40 rising by 2.2% and Germany’s DAX by 2.3%. Conversely, Asian markets closed weaker before the news, with Japan’s Nikkei 225 and Hong Kong’s Hang Seng experiencing losses. Treasury yields decreased as falling oil prices alleviated inflation concerns, with the 10-year Treasury yield dropping to 4.24%.