Markets show extreme volatility in early trading after news broke last night about a two-week ceasefire between the U.S. and Iran, shortly before President Trump’s 8pm ET deadline after which he said he would order major strikes on Iranian infrastructure such as power plants and bridges.

Prices are moving fast, but for now S&P 500 futures (/ES) are up about +2.75%, the tech-focused Nasdaq 100 futures (/NQ) jumped roughly +3.48%, and the small-cap Russell 2000 futures (/RTY) surged around +3.83%. Crude oil futures (/CL) show the most severe move of all major futures products, plunging about -17% as part of the ceasefire agreement which includes reopening the Strait of Hormuz; perhaps one of the most important maritime choke points in the world because about 25% of all seaborne petroleum products must pass through it. Volatility also is sharply lower in early trading, with the CBOE Market Volatility Index (VIX) down 20% near the 20 level after closing at 25.78 yesterday and reaching highs of 28.

The broad strokes of the agreement are that the U.S. and Israel will suspend bombing and other attacks on Iran for two weeks, contingent on Iran keeping the Strait of Hormuz open. Iran’s Supreme National Security Council said transit would also need to be coordinated with Iranian military forces. Tehran additionally released a 10-point proposal of other conditions, which President Trump called “a workable basis on which to negotiate” on social media. The Iranian proposal includes language about “establishment of a secure transit protocol in the Strait of Hormuz, ensuring Iran’s control under the agreed framework.”

The news is having significant effects on individual stocks as well. Delta Airlines (DAL) is up about +12.2% which is partially due to its quarterly earnings report beating on the top and bottom line this morning, but also because skyrocketing fuel costs due to the Strait of Hormuz closure presented serious headwinds for airlines in recent weeks. Delta was uniquely well situated to weather these fluctuations as it is the only airline to own an oil refinery, but the news is nonetheless positive for the industry as a whole with other stocks like United Airlines (UAL, +13.00%) and Southwest Airlines (LUV, +11.04%) near the top of the premarket movers. Other notable upside movers include cruise lines like Carnival (CCL, +10.91%) and Norwegian Cruise Line (NCLH, +8.7%) from lower fuel costs for ships and the easing of geopolitical tensions.

On the other side of the spectrum, energy companies are taking a beating this morning with names like APA Corp. (APA, -9.24%), Occidental Petroleum (OXY, -8.01%), Devon Energy (DVN, - 6.01%) and ExxonMobil (XOM, -5.50%) facing significant declines. Chemical companies like Dow Inc. (DOW, -8.36%), LyondellBasell (LYB, - 8.20%), and CF Industries (CF, -10.15%) are also showing outsized losses as the ceasefire eases concerns about supply chain disruptions.

‘Risk-On’ trading will be the narrative today as investors rotate into stocks while a falling U.S. Dollar and a slide in Yields are also lending support to equities. Focus for investors will remain on headline news out of the Middle East along with oil prices dumping as traders breathe a sigh of relief on the ceasefire – for the time being.  

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