Oil has plunged below $100 a barrel while stock markets rally after Iran and the US agreed to a two-week ceasefire that will open the Strait of Hormuz.
At the eleventh hour, Trump said he had agreed to pause the conflict so long as Iran reopened the Strait. It came just hours before Trump's deadline for Iran to meet his demands or he would kill a 'whole civilisation'.
Brent crude prices fell around 15 per cent after the announcement as Iran confirmed it would allow two weeks of 'safe passage' in the key shipping route, through which a fifth of the world's oil passes.
The talks, led by Pakistan, will begin on Friday to discuss a 10-point plan, which includes control over the strait and the lifting of sanctions.
This morning, Brent crude is trading at around $93 a barrel,having traded at around $110 on Tuesday.
Asian markets welcomed the deal, with stocks surging overnight. South Korea's Kospi, which has been hit hard by the war, jumped 6.5 per cent, while Japan's Nikkei 225 rose 5.4 per cent.
The FTSE 100 is up 250 points, or 2.45 per cent, while gilt yields are on the slide as markets slash their bets for Bank of England interest rate hikes this year.
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Miners and housebuilders surge on ceasefire news
Miners Antofagasta and Fresnillo are among the FTSE's biggest risers this morning as gold inched two per cent higher on news of the ceasefire.
Housebuilders are also gaining as traders slash the chances of the Bank of England hiking interest rates.
Persimmon is up 8.64 per cent, while Barratt Redrow and Berkeley are up 8.6 per cent and 6.6 per cent, respectively.
Close Brothers' shares surge on motor finance update
Close Brothers shares surged this morning after posting an update on the motor finance redress scheme announced by the City watchdog last week.
The banking group expects the Financial Conduct Authority's redress scheme to cost it in the region of £320 million, which it said was 'broadly similar' to what it expected. It added that it could be 'comfortably absorbed by existing capital resources.'
'Steep hurdles to clear'
Chris Beauchamp, chief analyst at IG said: 'Both sides will spin this as a win, but for investors the important thing now is whether the negotiations that begin this week will lead to a durable deal.
There are some pretty steep hurdles to clear, on uranium, missiles and who controls the Straits of Hormuz, so we could be poised to repeat Tuesday's drama some time in the second half of April.
'But for now stocks have the bit between their teeth and oil prices have fallen back below the totemic $100 level. Disruptions are bound to follow across the globe but progress on a sustainable deal might mean that markets might continue to look past these, just as they did with tariff uncertainty.'
FTSE surges and gilt yields slide
The FTSE 100 is up 280 basis points yo 10,632 as investors breathed a sigh of relief following news of the ceasefire.
L&G, Prudential and Howden Joinery all rose by over 5 per cent.
Gilt yields were on the slide as markets slashed their bets on Bank of England interest rate hikes this year.
The 5 year gilt yield, which moves inversely to price, fell 22 basis points to 4.238 per cent, while the 10-year yield dropped 19 basis points to 4.71 per cent.
Markets are now pricing in a 35 basis point hike this year - between one and two 25bps - compared to 63bps on Friday.
House prices slide on Middle East uncertainty
The average house price fell 0.5 per cent in March, following a 0.3 per cent in February, according to the latest Halifax house price index.
It meant that across the UK, the average house price was £299,677 last month.
Growth in property values also slowed, reaching 0.8 per cent, down from 1.2 per cent in February.
Amanda Bryden, head of mortgages, Halifax, said: 'The recent slowdown in the housing market reflects the wide uncertainty regarding the conflict in the Middle East.
'Concerns about higher energy prices have pushed up inflation expectations, which in turn led to a rise in mortgage rates, reducing confidence that interest rates will be cut this year and dampening the initial momentum in the market seen at the start of the year.'
