investingLive European markets wrap: End in sight to US-Iran war? Or another false dawn?

Headlines: US, Iran reportedly getting close to a framework deal to end the war Iranian navy talks up possible safe transit through Strait of Hormuz as US threats recede The S&P 500 extends gains into new record highs as US, Iran close in on a deal to end war USD/JPY sees a quick knock down today, another intervention hit? Japan goes hard with latest intervention push, USD/JPY drops to ten-week low Eurozone economy wrestles with stagflation amid Middle East conflict, PMI data shows UK April final services PMI 52.7 vs 52.0 prelim Markets: WTI crude down nearly 12% to $90.50, Brent crude down over 11% to $97.97 Equities rallying strongly with major indices in Europe up between 2% to 3% S&P 500 futures up 1.0%, Nasdaq futures up 1.6% on the day US dollar falls across the board; USD/JPY intervention play earlier faded somewhat US 10-year yields down ~7 bps to 4.35% Gold up over 3% to $4,712 and silver up nearly 7% to $77.73 Bitcoin up 1.1% to $82,553 Is it all too good to be true? Things are starting to take shape today in what looks to be a potential path towards ending the conflict between the US and Iran. And markets are not waiting around to cast any doubt on that as oil prices sink while risk trades rally further on the headlines. A report by Axios kicked things off in saying that the US and Iran are nearing a framework agreement to putting a stop to the war. That being said, there's quite a number of conditions that need to be met. The ceasefire will continue as both sides will also retreat from putting a stranglehold on the Strait of Hormuz. Only if that happens, then only we will start to see negotiations on nuclear - which is still a key sticking point between the two sides. A Pakistani source by Reuters confirmed the Axios reporting before Iran's navy came out to announce a new protocol on transit through the Strait of Hormuz. There's still a lot of uncertainty though to be honest. That as the conditions for this framework deal has a lot of little nuances that need to be ironed out and clarified. Is Iran really going to cede control over the strait? What is this new protocol that they are speaking of? Will the US really lift their naval blockade and sound a retreat on military forces? What happens if both sides still cannot come to terms on a nuclear agreement? For now, it is being reported that ships and vessels in the Gulf region are still confused about the whole situation and there is still no movement along the Strait of Hormuz. But amid the headlines, markets are running away with the optimism once again as oil prices crater and risk trades surge to new heights. WTI crude is down nearly 12% to $90.50 on the day while Brent crude is down over 11% to $97.97 currently. Meanwhile, major indices in Europe are rallying hard in posting gains between 2% to 3% as US futures also jump higher and are poised for fresh record highs at the open later. S&P 500 futures are up 1% with Nasdaq futures up 1.6% on the day. Elsewhere, the US dollar has dropped across the board with EUR/USD pushing up from around 1.1700 earlier to 1.1770 and AUD/USD up from 0.7190 to 0.7250 levels on the day. USD/JPY was also a notable mover after Japan intervened in the market just before the start of European trading. The pair was sent down from 157.70 to a low near 155.00 before a rebound back to 156.50 after. And amid the more optimistic news, it is now back down to near 156.00 on the day - down a little over 1%. In other markets, bond yields are falling off as energy prices dip lower. 10-year yields in the US are down 7 bps to 4.35% with 30-year yields down 5 bps to 4.93% currently. Meanwhile, precious metals are seeing a solid rally on the news with gold up over 3% to $4,712 and silver up nearly 7% to $77.73 on the day. This article was written by Justin Low at investinglive.com.