Markets Rally as Ceasefire Hopes Weigh on Oil, Jobs Loom

Global equities and large-cap technology shares climbed on Wednesday as markets reacted to mixed diplomatic signals about a possible Middle East ceasefire. West Texas Intermediate crude fell below $100 a barrel and the U.S. dollar eased as traders positioned for the U.S. nonfarm payrolls report due Friday for April.

U.S. indexes extended a broad rally driven by gains in major tech names and continued appetite for risk. Market participants pointed to stronger-than-expected corporate earnings, aggressive short-covering after earlier conflict-related selling and a resilient U.S. economy as factors supporting stocks. Cryptocurrencies also trended higher alongside equities.

Diplomatic developments in the Persian Gulf produced conflicting cues. The Iranian navy issued an unusually optimistic statement saying safe and stable transit through the Strait of Hormuz “will soon be possible” as military threats eased. At the same time, some Iranian officials rejected proposed U.S. terms as an “American wish,” and the U.S. president tempered expectations for an immediate, definitive peace. Those mixed signals contributed to a pullback in pre-market gains on Wednesday.

WTI, which had traded above $100 for nearly two weeks, dropped into the low $90s on the optimistic maritime-security comments before partially rebounding. The initial fall in oil prices removed near-term support for currencies tied to commodities, including the Canadian dollar.

The U.S. dollar fell to two-month lows as the easing geopolitical narrative boosted flows into risk assets, though it later recovered and left technical outlooks unclear. Analysts noted recent intervention and volatility in FX markets, including activity by Japanese authorities, as factors in the dollar’s swings. On the week the dollar was near unchanged against the Canadian dollar and several European currencies.

Canada’s currency gained over the past week on firmer oil but lost some ground as ceasefire hopes rose. The Toronto Stock Exchange lagged other major markets, with a stronger loonie and local dynamics cited as dampening factors.

U.S. equities have risen roughly 10% to 20% from their war-era lows, reversing earlier conflict-driven losses. Market attention is focused on Friday’s April nonfarm payrolls report, where traders are watching the unemployment rate closely after methodological changes at the Bureau of Labor Statistics. Investors are also monitoring a series of Federal Reserve speakers, next week’s CPI and PPI inflation reports, and a planned meeting between the U.S. president and China’s leader that traders expect could affect geopolitical risk ahead of the summit.

Analyst Elior Manier at OANDA’s MarketPulse wrote that traders will need to see clear developments to change the current market direction, highlighting sensitivity to both policy signals and upcoming economic data.