US stock markets climbed Wednesday following the electronic signing of a peace agreement between the Trump administration and Iran, which extends a ceasefire and facilitates the gradual reopening of the Strait of Hormuz. The deal, initially announced over the weekend, has alleviated concerns over energy supply disruptions, prompting increased shipping traffic through the strategic waterway.

The S&P 500 rose 1.1 percent by early afternoon trading in New York, with technology companies driving gains. The Nasdaq Composite index increased by 1.3 percent, while the Philadelphia Semiconductor Sector index surged 6 percent to reach a record high. Mohit Kumar, chief European economist at Jefferies, characterized the market response as a "relief rally," viewing the deal as a positive development for investors.

Following the agreement, Brent crude oil prices declined to as low as $76.54 per barrel before settling near $77.60 in late London trading—down 2.5 percent on the day. West Texas Intermediate (WTI) futures mirrored the slide, dropping 2.8 percent to about $74.60 per barrel. The rise in shipping activity through the Strait of Hormuz eased earlier fears of energy shortages in global markets.

In Europe, equity markets were mixed after an initial lift earlier in the week tied to the peace deal. The Stoxx Europe 600 fell 0.3 percent, while the FTSE 100 dropped 1 percent. Conversely, Germany’s DAX and France’s CAC 40 indices each gained 0.4 percent.

In the bond market, government securities remained largely stable amid shifting expectations for US monetary policy. Futures contracts now fully price in a 25 basis point Federal Reserve rate hike by October, advancing the timeline significantly from earlier projections that anticipated a rise in April 2027. The yield on 10-year US Treasury notes edged down slightly by 0.02 percentage points to 4.44 percent.

In the UK, 10-year gilt yields held steady at 4.76 percent ahead of the Makerfield by-election results, which could see Labour leadership contender Andy Burnham potentially return to Parliament. Market participants remain watchful of any political developments that might influence gilt prices.

Currency markets saw the US dollar continue its rally, gaining 0.7 percent against a basket of major currencies following Kevin Warsh’s first day as chair of the Federal Reserve. The euro weakened 0.3 percent to $1.146, reaching its lowest level since late March, while the British pound slipped 0.6 percent to $1.322 against the dollar.

Meanwhile, precious metals declined, with gold down about 1 percent to $4,215 per troy ounce and silver dropping 3 percent to $65.93 per troy ounce.