Asian shares rose on Wednesday after news of a US-Iran ceasefire, following gains in US stock index futures. Japan’s Nikkei 225 and South Korea’s Kospi each climbed more than 5% intraday.
Donald Trump said on Truth Social he would pause planned strikes on Iran for two weeks if Tehran agrees to a complete, immediate and safe opening of the Strait of Hormuz. Iran said it accepted a two-week ceasefire, with talks due to start on Friday in Islamabad, Pakistan.
Ceasefire Drives Risk On
Iran’s Foreign Minister Seyed Abbas Araghchi said safe passage through the waterway would be possible for two weeks. Oil prices fell by more than 10% after the announcement.
Traders then looked to the release of the FOMC minutes later in the North American session. Attention is also on the US Personal Consumption Expenditure (PCE) Price Index and the US Consumer Price Index (CPI), due on Thursday and Friday.
The article notes Asia contributes around 70% of global economic growth and lists key indices such as the Nikkei 225, Kospi, Hang Seng, Shanghai Composite, Shenzhen Composite, Sensex and Nifty. It outlines common market drivers, including company earnings, economic data, policy decisions, geopolitics and currency moves.
With the US-Iran ceasefire news, we have seen a significant collapse in market volatility. The CBOE Volatility Index (VIX), which was elevated above 22 last week amid the rising tensions, has likely fallen sharply below the 15 mark today. This presents an opportunity for us to sell option premium, such as through bull put spreads on indices like the S&P 500, to capitalize on the reduced fear.
Positioning After Volatility Collapse
The more than 5% surge in the Nikkei 225 and Kospi has priced in much of the initial optimism, making it risky to chase the rally with outright long positions. We should instead view this as a moment to position for stability, considering the two-week truce is still fragile. After the sharp market declines in the first quarter of 2026, this rally brings indices back to key resistance levels we last saw in late 2025.
Crude oil’s 10% plunge is the most direct consequence, offering a clear tactical opportunity for traders. A two-week safe passage in the Strait of Hormuz does not solve the underlying conflict, suggesting this price drop may be an overreaction. We believe buying longer-dated call options on Brent crude, perhaps for June or July 2026 delivery, is a prudent way to bet on a potential return of the geopolitical risk premium.
This sudden drop in energy prices directly impacts inflation expectations, which is critical ahead of this week’s US PCE and CPI reports. The Fed has been holding rates steady since late 2025 due to persistent inflation, but this development could soften their hawkish stance. We should watch the FOMC minutes for any change in tone, as a more dovish outlook would further fuel this risk-on rally and be bullish for interest rate-sensitive assets.
