Oil futures sank below $100 a barrel while equity and bond prices rallied sharply on Wednesday after the United States and Iran agreed on a two-week ceasefire, prompting hopes for a resumption of oil and gas flows through the Strait of Hormuz.

On Tuesday night U.S. President Donald Trump announced the ceasefire, which was brokered by Pakistan, less than two hours before his deadline for Iran to reopen the Strait, through which about a fifth of global oil and liquefied natural gas is shipped, or face devastating attacks on its civilian infrastructure. But while Trump claimed victory, analysts noted that Iran’s continued control over the Strait leaves it with powerful leverage over global energy markets and Gulf rivals.

Iran said it would cease counterattacks and provide safe passage through the waterway if attacks against it stop. But on Wednesday afternoon, the country’s Parliament speaker, Mohammad Baqer ‌Qalibaf, said that three key clauses of a 10-point proposal were violated already before negotiations were set to start on Friday and that in such a situation, a bilateral ceasefire or negotiations were unreasonable.

Still, investors, who had moved to the sidelines on Tuesday ahead of Trump’s deadline, stuck to their bullish stand throughout Wednesday’s session, pushing Wall Street equity indexes to nearly one-month highs. The U.S. dollar edged higher while Treasury yields pared losses but were still down on the day as investors bet that sliding oil prices could keep inflation in check and increase the probability of Federal Reserve rate cuts.

“What we’re seeing across equities, bonds, gold and the U.S. dollar is a classic risk-on scenario. Markets are looking for breathing room and are welcoming the potential ceasefire and opening of the Strait  of Hormuz. That’s really being reflected across all the asset classes,” said David Krakauer, vice president of portfolio management at Mercer Advisors in San Diego. He added that “there have many moving elements to this and things change at the drop of a dime.”

In U.S. equities, at 03:03 p.m. ET (1904 GMT) the Dow Jones Industrial Average rose 1,123.51 points, or 2.41%, to 47,708.09, the S&P 500 rose 140.86 points, or 2.13%, to 6,757.71 and the Nasdaq Composite rose 530.37 points, or 2.41%, to 22,548.22.

MSCI’s gauge of stocks across the globe rose 29.33 points, or 2.94%, to 1,027.42. and earlier the pan-European STOXX 600 index closed up 3.88%.

“Today’s market rally is a classic geopolitical relief trade because oil is collapsing and some of the tail risks are coming off the table for now,” said Gene Goldman, chief investment officer at Cetera Investment Management.

“The market is quickly repricing away from a global energy shock. Today’s move is being amplified. There’s a lot of short covering taking place, a lot of systematic buying, turning what should be a modest equity bounce into a strong rally.”

He noted, however, that “there’s still uncertainty about the ceasefire, which is only two weeks, and there’s contradictions around what the Trump administration has said and what the Iranians have said about the Strait of Hormuz.”

In energy markets, U.S. crude settled down 16.4%, or $18.54, at $94.41 a barrel while Brent settled at $94.75 per barrel, down 13.3%, or $14.52 on the day although both were still well above pre-war levels.

In Treasuries, the yield on benchmark U.S. 10-year notes fell 5.4 basis points to 4.289%, from 4.343% late on Tuesday while the 30-year bond yield  fell 3.5 basis points to 4.8856%.

The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, fell 4.1 basis points to 3.792%.

Earlier, euro zone government bond yields also dropped sharply, as the ceasefire prompted traders to dramatically scale back their bets on future rate hikes from the European Central Bank.

In currencies, the dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.23% to 99.15.

While the euro was up 0.47% at $1.1648, against the Japanese yen, the dollar weakened 0.55% to 158.71.

In precious metals, gold pared gains after touching a nearly three-week peak after the U.S./Iran agreement.

Spot gold rose 0.02% to $4,703.33 an ounce. Spot silver rose 0.86% to $73.56 an ounce.

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(Reporting by Sinéad Carew, Iain Withers, Tom Westbrook and Ankur Banerjee; Additional reporting by Dhara Ranasinghe; Editing by Shri Navaratnam, Kevin Buckland, Kim Coghill, Philippa Fletcher and Deepa Babington)