A look at the day ahead in European and global markets from

Ankur Banerjee

A sparkling relief rally across assets will greet Europe

after U.S. President Donald Trump and Iran agreed to a two-week

ceasefire that could pave the way for the crucial Strait of

Hormuz to be reopened and a broader resolution.

The deal, agreed just hours before Trump's deadline for

Tehran to open the strait, represented an abrupt turnaround from

earlier, when he issued an extraordinary warning that "a whole

civilization will die tonight" if his demands were not met.

The agreement is contingent on the opening up of the

strategic waterway that typically carries about 20% of the

world's oil and gas. Iran has said it would provide safe passage

through the strait for two weeks.

And so, TACO Tuesday delivered some respite to markets that

have been rattled since late February by the U.S. and Israel's

war with Iran, with fears of a debilitating energy price shock

easing as oil sank below $100 per barrel in Asian hours.

Stocks surged in Asia, while U.S. and European futures

pointed to a strong start to the session as risk appetite

improved. Treasuries rallied hard as traders rekindled their

wagers of possible rate cuts at the end of 2026 from the Federal

Reserve, with inflation worries easing as oil prices fell.

The sobering reality that a resolution has not yet been

found and a ceasefire is likely to be fragile means markets will

be very sensitive to headlines and developments in the Middle

East negotiations.

Investors are hoping for some semblance of normalcy around

the Strait of Hormuz that could ease the chokehold on supplies

of oil, gas and fertiliser over the next two weeks.

Analysts don't expect energy prices to go back to the levels

they were before the war broke out due to the extensive damages

to some of the energy infrastructure in the region.

That could mean inflation worries may linger and the rally

in the short end bond market may be brief.

Key developments that could influence markets on Wednesday:

* Euro zone retail sales data for February

* March construction PMI data for France, Germany and euro