TOKYO (AP) — Asian shares surged in Wednesday morning trading, as oil prices plunged after the U.S. and Iran agreed to a two-week ceasefire that includes the reopening of the Strait of Hormuz.

Japan’s benchmark Nikkei 225 gained 5.0% to 56,106.18 in early trading. Australia’s S&P/ASX 200 jumped 2.6% to 8,952.30. South Korea’s Kospi soared 5.9% to 5,819.97. Hong Kong’s Hang Seng surged 2.6% to 25,767.42, while the Shanghai Composite added 1.7% to 3,957.55.

Benchmark U.S. crude sank $16.84 to $96.11 a barrel. Brent crude, the international standard dropped $14.51 to $94.76 a barrel.

That came as a reaction to the ceasefire as the recent spike in their prices was directly in response to the war, which had effectively blocked passage through the Strait of Hormuz. Much of the world’s oil supply is transported through the strait, including oil headed to resource-poor Japan.

“Yet the mood remains one of cautious optimism rather than outright celebration. The ceasefire is only two weeks long, and markets will be watching closely to see whether shipping through the Strait of Hormuz normalizes as promised and whether the fragile truce can pave the way for a more durable peace agreement,” Tim Waterer, chief market analyst at KCM Trade, said.

Late Tuesday, Trump said he was holding off on his threatened attacks on Iranian bridges, power plants and other civilian targets. Iran’s foreign minister said passage through the strait would be allowed for the next two weeks under Iranian military management.

Global stocks have gyrated in recent weeks since the war began in late February. Trump’s deadline to open the Strait of Hormuz came at 8 p.m. Eastern time.

Earlier on Wall Street, shares rallied at the end of trading after Pakistan’s prime minister urged Trump to extend his deadline for another two weeks and asked Iran to open up the strait. The S&P 500 erased all its losses and ended with a modest gain of 0.1%. The Dow Jones Industrial Average dipped 85 points, or 0.2%, and the Nasdaq composite added 0.1%.

In the bond market, Treasury yields eased on word of a potential ceasefire. The yield on the 10-year Treasury fell to 4.24% from 4.30% earlier Tuesday.

In currency trading, the U.S. dollar fell to 158.54 Japanese yen from 159.52 yen Wednesday. The euro cost $1.1671, up from $1.1597.

___

AP Business Writer Stan Choe in New York contributed to this report.

Yuri Kageyama is on Threads: https://www.threads.com/@yurikageyama

Yuri Kageyama, The Associated Press