Oil slumps, shares rally on Iran-Israel ceasefire

Oil tumbled nearly 4%, global shares surged and the dollar dropped on Tuesday as markets took heart from a ceasefire between Israel and Iran and shrugged off what US President Donald Trump said were violations by both sides.

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Brent futures had already slid 7% on Monday and US shares jumped after Iran made only a token retaliation against a US base to an attack over the weekend, and signalled it was done for now.

With the immediate threat to the vital Strait of Hormuz shipping lane seemingly over, the Brent benchmark touched its lowest since June 11 and was last at $68.81 a barrel, down 3.7%. US crude futures dropped 3.7% to $65.91 a barrel.

"Investors mostly shrugged at what appeared on the surface a seismic geopolitical event over the weekend and those who kept their nerve and held off from de-risking have so far been proven right," said Kenneth Broux, head of corporate research FX and rates at Societe Generale.

While the ceasefire so far has seemed shaky - Trump said he was "not happy" with either side for violating the truce, particularly with Israel - risk assets held onto their earlier gains.

S&P 500 futures rose 0.8% and Nasdaq futures were 1% higher. Europe's Stoxx 600 gained 1.3%, with travel stocks including airlines surging 3.8%, while oil and gas names shed 2%.

Earlier in the day, MSCI's broadest index of Asia-Pacific shares outside Japan jumped 2.2%, while Japan's Nikkei rallied 1.1%.