Oil prices plunged Wednesday while stocks soared after the United States and Iran agreed to a two-week ceasefire that will see Tehran temporarily reopen the vital Strait of Hormuz.
With Donald Trump's deadline approaching for the Islamic republic to reopen the waterway or face obliteration, he announced a halt to attacks for two weeks and said he had received a "workable" 10-point proposal.
Iran later said it had agreed to safe passage in the Strait, through which a fifth of global oil and gas passes.
The news pushed down crude prices, with West Texas Intermediate losing almost 20 percent and Brent as much as 16 percent as investors heaved a huge sigh of relief after more than five weeks of war that has hammered supplies.
The euphoria sent global equities rocketing on hopes the crisis that has shocked the global economy for more than a month will come to an end.
Seoul jumped 6.9 percent and Tokyo 5.4 percent, while Taipei added more than four percent and Mumbai 3.8 percent.
Hong Kong advanced more than three percent, while Sydney, Shanghai, Bangkok, Manila, Jakarta, Singapore and Wellington were also sharply higher.
London, Paris and Frankfurt extended the global rally, while US futures soared.
Middle East stocks also rallied, with Dubai jumping 8.5 percent, the biggest intraday increase since December 2014, according to Bloomberg.
Stocks in Abu Dhabi climbed more than three percent, which was the largest gain since March of the same year.
Trump had threatened Tuesday that if Hormuz was not reopened, "a whole civilization will die tonight, never to be brought back again". That came after he vowed to bomb bridges, power plants and other civilian infrastructure in Iran.
Iran warned it would deprive the United States and its allies of oil and gas "for years" if he did so.
However, as the world counted down to the cutoff, the US president took to social media to say: "Subject to the Islamic Republic of Iran agreeing to the COMPLETE, IMMEDIATE, and SAFE OPENING of the Strait of Hormuz, I agree to suspend the bombing and attack of Iran for a period of two weeks."
He added that it "will be a double sided CEASEFIRE!" and that "we have already met and exceeded all Military objectives, and are very far along with a definitive Agreement concerning Longterm PEACE with Iran, and PEACE in the Middle East".
He later said on Truth Social that the United States would help with the traffic buildup in the Strait of Hormuz, adding: "There will be lots of positive action! Big money will be made. Iran can start the reconstruction process."
- Relief for Asia -
Prime Minister Shehbaz Sharif of Pakistan, which has played a key mediator role, said the ceasefire would start immediately.
He said the United States "along with their allies" had agreed to a ceasefire everywhere including Lebanon, implying that Israel had agreed to halt its invasion of its northern neighbour.
However, Tel Aviv said it supported the suspension of the bombing of Iran, but maintained the ceasefire did not include Lebanon.
Iran claimed victory, with the Iranian Supreme National Security Council saying: "The enemy has suffered an undeniable, historic and crushing defeat in its cowardly, illegal and criminal war against the Iranian nation."
The ceasefire also led to a sharp drop in the dollar, which had become the safe-haven while the war raged, with the yen, euro and pound all strengthening.
Gold rallied, having been hit by concerns of a sharp rise in inflation that will keep interest rates elevated, while bitcoin rose.
"Trump and the Iranians have confirmed that various proposals have been exchanged which will now form the basis of negotiations towards a longer-lasting peace agreement, which will be 'finalised and consummated' over the coming fortnight," said Michael Brown at Pepperstone.Â
"This latter aspect helps to explain the significant risk-on market reaction that we've seen," he added.
"Not only are participants pricing out the risk of near-term escalation, but they must also price in the increased likelihood that we do now see a durable, and long-lasting agreement formed to bring hostilities to an end."
Stephen Innes of SPI Asset Management said the deal "matters enormously for Asia", where several governments have been forced to introduce measures to combat rising energy costs.
"Lower oil prices remove the chokehold that has weighed on regional risk sentiment, especially in markets that feel imported energy shocks first and hardest," he said.Â
"With crude backing off, the pressure on inflation expectations and front-end yields eases at the margin, and that is enough to let capital rotate back toward risk, at least for now."
- Key figures at around 0810 GMT -
West Texas Intermediate: DOWN 15.1 percent at $95.9 a barrel
Brent North Sea Crude: DOWN 13.5 percent at $94.56 a barrel
Tokyo - Nikkei 225: UP 5.4 percent at 56,308.42 (close)
Hong Kong - Hang Seng Index: UP 3.1 percent at 25,893.02 (close)
Shanghai - Composite: UP 2.7 percent at 3,995.00 (close)
London - FTSE 100: UP 2.3 percent at 10,590.42
Euro/dollar: UP at $1.1700 from $1.1585 on Tuesday
Pound/dollar: UP at $1.3424 from $1.3274
Dollar/yen: DOWN at 158.20 yen from 159.70 yen
Euro/pound: DOWN at 87.12Â pence from 87.28 pence
New York - Dow: DOWN 0.2 percent at 46,584.46 (close)
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