Oil prices plunged sharply, while aviation and tourism sectors showed signs of recovery. On Friday, Iran announced the reopening of the Strait of Hormuz, raising market expectations that this could alleviate global concerns over oil shortages and economic uncertainty. In response, energy futures prices dropped immediately, risk assets gained strength across the board, European and U.S. stock markets rebounded significantly, and aviation and tourism sectors began to recover. At the same time, expectations for interest rate hikes cooled, pushing down government bond yields worldwide. The U.S. dollar index briefly fell to levels last seen in late February, before the conflict began.

Energy prices declined. The reopening of the Strait of Hormuz on Friday brought a fresh wave of relief to energy markets. The U.S. crude benchmark WTI fell nearly 15% for the week, marking its largest weekly drop since April 24, 2020. European energy prices, which had been heavily affected by Middle East tensions, also declined substantially. The European benchmark diesel futures fell 15% to $997.75 per ton after Iran announced the reopening of the strait following a ceasefire. Natural gas prices also dropped, with the benchmark Dutch TTF contract down 8% to €39.06 per megawatt-hour. UK natural gas futures fell more than 7%, dropping below £1 per therm. Kathleen Brooks, Research Director at investment platform XTB, stated, "This is the most significant development since the U.S.-Iran ceasefire began, offering hope that the war may end soon and supply chains can gradually return to normal." The latest sharp drop in oil prices sparked debate among investors: whether it was an overreaction to news—with a second round of U.S.-Iran negotiations possibly taking place this weekend—or the start of a broader decline back toward pre-conflict price levels. Tyler Richey, analyst at research firm Sevens Report Technicals, suggested that the heavy selling in oil may have been overdone, with prices falling into the $70 per barrel range for the first time in over a month. He noted that a final, lasting ceasefire agreement between the U.S. and Iran has not yet been finalized, and the state of negotiations may be more fragile than Friday’s oil price movement suggested. From a technical perspective, he added, it would be reasonable to expect a rebound to the $85–90 per barrel range before a more sustained downtrend emerges. Richey stated that in the long term, if ceasefires hold between the U.S. and Iran, as well as between Israel and Lebanon, U.S. crude prices could gradually decline to pre-war levels—around the $60s per barrel—by the end of June. However, he warned that due to complex fundamental challenges caused by the prolonged closure of the Strait of Hormuz and the resulting global oil logistics imbalance, a return to those levels could take longer than many expect.

European and U.S. stock markets surged. European equities rallied across the board in afternoon trading. Germany’s DAX, Spain’s IBEX 35, and France’s CAC 40 all rose about 2%, while the pan-European Stoxx 600 index posted its fourth consecutive weekly gain. Travel and luxury goods stocks both jumped more than 4%. LVMH, Hermès, and Kering, the parent company of Gucci, each rose more than 1.5%, after having fallen earlier in the week due to warnings about conflict-related sales impacts. Airlines, which had been hit by soaring fuel costs and declining bookings, also rebounded. Ryanair, Lufthansa, and easyJet saw gains between 6% and 7.5%. In addition, the European aerospace and defense index and banking stocks rose more than 3%. European semiconductor companies strengthened. In recent weeks, the Strait of Hormuz—a key shipping route for helium used in AI chips—had been largely closed. Dutch semiconductor equipment maker ASML and its competitor ASM International saw shares rise 1.2% and 3.1%, respectively. BE Semiconductor Industries, a Dutch supplier of semiconductor assembly equipment, gained 2.8%. German chipmaker Infineon Technologies advanced 4.8%, and STMicroelectronics rose 4.4%. During the conflict, European equities underperformed U.S. stocks, reflecting the region’s heavy reliance on external oil and gas supplies, as well as inflation concerns exacerbated by surging energy prices. Ciaran Callaghan, Head of European Equity Research at Amundi, commented, "The market reaction suggests that the strait’s reopening may have significant and potentially lasting implications, allowing us to somewhat move past the impact of this conflict." Driven by a surge in tech stocks and renewed investor risk appetite, the Nasdaq and S&P 500 both recorded their strongest three-week winning streak since 2020. Notably, the small-cap Russell 2000 index hit an intraday all-time high for the first time since the U.S.-Iran conflict began. A team of strategists at Deutsche Bank recently issued a report stating that U.S. equities warrant further optimism, with first-quarter corporate earnings growth expected to reach a four-year high. Over the past two decades, consensus expectations have reached such strong levels only three times: during the recovery after the 2008–2009 global financial crisis, the post-pandemic rebound, and following the implementation of corporate tax cuts during Trump’s first presidential term. Deutsche Bank indicated that earnings growth is expected to broaden across sectors, with 10 of 11 sectors showing positive growth. Leading growth and technology stocks are set to lead the way. This category has posted growth exceeding 24% each quarter since Q3 2023 and is projected to jump sharply from 27.5% in Q4 to 35.7%, with semiconductor firms being the main driver. The financial sector also performed strongly, with growth expected to rise from around 11% last quarter to nearly 20%. The industrial sector, supported by sustained AI demand and a modest recovery in manufacturing, is forecast to rebound from 2.8% to 7.9%. The consumer discretionary sector showed slight improvement, narrowing its loss from 7.5% to just 1.6%.

The U.S. dollar weakened, while precious metals regained strength. The U.S. dollar, which had served as a safe-haven asset since the conflict began in late February, lost its appeal. The U.S. dollar index, which measures the currency against a basket of peers, fell to an intraday low of 97.632, its lowest level since February 27, before the conflict started. Over the past two weeks, the index dropped about 2.5%, marking its largest two-week decline in a year. Non-U.S. currencies broadly strengthened. The euro against the U.S. dollar reached 1.1848, its highest since February 18. The euro gained 2.7% for the week, its largest weekly rise in a year. The British pound against the U.S. dollar rebounded nearly 0.4%, to around 1.3580. Bank of England Chief Economist Huw Pill criticized his colleagues' "wait-and-see" approach of maintaining policy unchanged during the U.S.-Iran conflict, stating that despite trade-offs, tackling inflation should remain the core task. The U.S. dollar fell 0.6% against the Japanese yen, approaching ¥158 per dollar. However, Bank of Japan Governor Kazuo Ueda did not signal a rate hike this month, instead noting that real interest rates remain low and corporate profits are strong, reinforcing expectations that the BOJ will keep policy unchanged at least until June. Government bond yields in Europe and the U.S. declined across the board. Short-term eurozone bond yields fell sharply to one-month lows, while money markets reduced bets on future European Central Bank rate hikes. U.S. Treasury yields also moved lower, with the 2-year yield, which is sensitive to interest rate expectations, falling 7.8 basis points to 3.69%. Pricing in the federal funds rate market indicated that the probability of a rate cut by year-end surged from nearly 20% at the start of the week to almost 50%. Expectations for rate cuts and a weaker dollar boosted precious metals. COMEX gold futures for May delivery rose nearly 2% intraday, again approaching $4,900 per ounce, while COMEX silver futures jumped more than 5%, firmly holding above $80 per ounce. Several banks, including Australia and New Zealand Banking Group and Goldman Sachs, recently stated that despite market disruptions caused by the Middle East conflict, gold is still expected to rally over the long term. Analysts believe that steady central bank gold purchases, ongoing geopolitical uncertainty, market expectations for Federal Reserve rate cuts, and investor diversification away from U.S. dollar-denominated assets all support a positive long-term outlook for gold. Daniel Hynes, analyst at ANZ, wrote in a report, "As macroeconomic fundamentals—comprising growth and inflation—weaken, this will pave the way for central banks to restart rate cuts." The bank maintained its previous outlook, forecasting gold to reach $5,800 per ounce by year-end. ANZ expects central bank gold buying to remain a key support for prices, with official purchases potentially reaching around 850 tonnes by 2026.