U.S. crude fell below $100 a barrel and Wall Street pointed toward gains Wednesday after U.S. markets soared to their best day in almost a year on renewed hopes that the Iran war could soon end.
Futures for the S&P 500 and Dow Jones Industrial Average climbed 0.8% before the opening bell, while Nasdaq futures jumped 1%.
The renewed optimism over a possible de-escalation of the Iran war, which is in its fifth week, came after U.S. President Donald Trump
said on Tuesday the United States will be done attacking Iran probably in two to three weeks, and that the U.S. “will not have anything to do with” what happens next in the Strait of Hormuz.
Benchmark U.S. crude dropped about 2% to $98.83 a barrel. Brent crude for June delivery dipped 2.1% to $101.79 per barrel.
U.S. gas prices rose again overnight, however, to a national average of $4.06, according to the auto club AAA.
Iran hit an oil tanker off the coast of Qatar and Kuwait’s airport on Wednesday while airstrikes battered Tehran — an unrelenting tempo hours after Trump said he was nearly ready to walk away from the war once he felt confident Iran would not be able to build a nuclear weapon — even if Tehran does not agree to a ceasefire.
That raised the possibility that the U.S. could withdraw without any guarantee from Iran that it would stop bombing its Gulf Arab neighbors or release its grip on the crucial Strait of Hormuz. A fifth of the world’s traded oil passes through the strait in peacetime and Tehran’s stranglehold, along with its strikes on energy infrastructure in the region, has caused oil prices to skyrocket, with far-reaching consequences for the global economy.
Even if the strait were to reopen quickly, some effects like higher food prices could persist for months or longer.
“De-escalation hopes have given markets a lift, but we think the effects of the war would, in many cases, persist even if the war did end soon,” wrote Thomas Mathews, head of markets, Asia Pacific at Capital Economics in a research note Wednesday.
“It’s worth thinking through how markets might fare if the war were to end ‘very soon,’” he wrote. “Do markets have further to recover if sentiment continues to improve? The answer is almost certainly yes.”
The White House said Trump will deliver a public address Wednesday evening on the Iran war.
In early equities trading, Nike fell more than 10% after it's s third-quarter profit fell from a year ago as its margins shrunk due to tariffs. The company's fourth-quarter outlook also disappointed investors.
Coming later Wednesday morning is the U.S. government's latest retail sales report.
At midday in Europe, Britain's FTSE 100 and France's CAC 40 were each up 2% while Germany's DAX climbed 2.6%.
The big gains in European markets came even as German growth forecasts for 2026 and 2027 were cut by experts on Wednesday as governments across Europe implement measures aimed at reducing the price impact of the Iran war.
A group of five economic institutes predict German gross domestic product will expand by 0.6% this year — less than half the 1.3% they forecast in September.
Inflation has sped up in the 21-nation euro bloc, driven by higher energy prices due to the Iran war and blocking of the Strait of Hormuz.
Asian shares closed sharply higher. South Korea’s Kospi recovered its losses from earlier this week, surging 8.4% to 5,478.70, while Tokyo’s Nikkei 225 rose 5.2% to 53,739.68. A survey by Japan’s central bank released Wednesday showed business sentiment for major Japanese manufacturers improved despite Iran war worries.
Hong Kong’s Hang Seng was up 2.2% to 25,339.45, while the Shanghai Composite index was trading 1.5% higher at 3,948.55.
Australia’s S&P/ASX 200 was up 2.2% to 8,671.80.
Taiwan's Taiex climbed 4.6%, and India's Sensex rose 1.7%.
