US president Donald Trump said he believed a deal with Iran was “very possible”, but threatened to resume his bombardment of the country if negotiations fell apart.
International oil benchmark Brent North Sea made a double-digit plunge to under US$100 a barrel, before cutting losses, finishing down 7.8% at $101.27 a barrel.
Major US indices extended a powerful rally, with both the S&P 500 and Nasdaq finishing at records for the second straight day. The Nasdaq gained two percent.
European equities also got a boost, with the Paris exchange piling on gains of nearly three percent and both Frankfurt and London ending the day up more than two percent.
US news outlet Axios, citing two US officials, reported that both sides were close to agreeing on a one-page memorandum of understanding to end the war and set a framework for more detailed nuclear negotiations.
“The (Axios) news has ignited fresh optimism that we’re moving in the right direction for global energy markets, which is supporting a broad risk-on move” into equities, noted Saxo UK investor strategist Neil Wilson.
“We’ve had very good talks over the last 24 hours, and it’s very possible that we’ll make a deal,” Trump told reporters in the Oval Office.
Iranian foreign ministry spokesman Esmaeil Baqaei told local media that the “US plan and proposal are still under review”, and that Tehran would convey its position to mediator Pakistan “after finalizing its views”.
But Mohammad Bagher Ghalibaf, Iran’s parliament speaker who has taken the lead in negotiations with the US, warned Wednesday that Washington “is seeking, through a naval blockade, economic pressure and media manipulation, to destroy the country’s cohesion in order to force us to surrender”.
“We have been promised peace deals before, which have then failed to materialise, so while the market is willing to trade on the back of this deescalation, it will take further concrete steps to end the war and reopen the Strait of Hormuz before the oil price can meaningfully fall below US$100 per barrel for Brent crude,” said Kathleen Brooks, research director at trading platform XTB.
Wall Street’s latest move higher was also prompted by strong corporate earnings.
Shares in chip-maker AMD jumped 18.6% after it posted good first-quarter figures as well as a rosy outlook, helping other tech stocks.
Dow component Disney also had a good day, rising 7.5% after reporting better results than expected as markets cheered CEO Josh D’Amaro’s first quarterly results since taking the top job.
Elsewhere on Wednesday, Seoul’s Kospi stocks index piled on more than five percent to pass 7,000 points for the first time.
That came on the back of an eye-watering surge by Samsung, which rocketed 14.4% to hit a market capitalisation above US$1 trillion thanks to huge demand for its AI chips.
Samsung is only the second Asian firm after Taiwan’s TSMC to reach the figure. Samsung’s shares have risen around 300% over the past year as the artificial intelligence boom boosts South Korean growth.