European equities were poised for their biggest gain since March 2022 after the US and Iran agreed to a two-week ceasefire in exchange for reopening the Strait of Hormuz. Euro Stoxx 50 futures jumped 5.3% in early London trading, with Brent crude plunging 15% as traders anticipated reduced geopolitical risk.

Euro Stoxx 50 futures surged 5.3% at 7:22 a.m. in London, with US equity contracts also surging. That would be the biggest gain for the European gauge since March 2022. European natural gas futures dropped as much as 20% to the lowest since the start of the war. The pan-European Stoxx Europe 600 Index has fallen 6.8% since the conflict in the Middle East broke out at the end of February, leaving it almost unchanged year to date.

Christopher Dembik, senior investment adviser at Pictet, predicted traders would sell oil and defense stocks while buying beaten-down sectors like financials and materials. However, he warned that while markets may see this as the end of an episode, the global economy faces just beginning inflation pressures, particularly for food and materials.