Wall Street stocks trailed global indexes higher and oil prices fell more than 11% on Friday after Iran's foreign minister said the Strait of Hormuz was open for passage while a ceasefire in the seven-week war launched by the US and Israel is in effect.

Abbas Araqchi said in a post on X that passage for all commercial ships through the Strait of Hormuz, a key channel for global energy flows, was declared fully open for the remaining period of the ceasefire, in line with a ceasefire in Lebanon.

Brent crude futures fell sharply to $87.94 a barrel, down 11.5% on the day. U.S. crude fell a similar amount to $83.33 a barrel. While it is still above pre-war levels of around $70, this is a significant drop from the peak levels of late March, which, for Brent, were close to $120 per barrel.

Stocks around the world, which had already been trading around record levels, rose further following the news.

The S&P 500 (.SPX), which hit new records this week, rose 1.15% to 7,115.31. The Dow Jones Industrial Average (.DJI), which hit new records, rose 1.95% to 49,524.91. The Nasdaq (.IXIC), which hit new records, rose 1.15% to 24,378.97, and the Russell 2000 index of small-cap stocks also rose to a record. Europe's STOXX 600 index rose 1.49%, having been largely unchanged before the news.

"This is clearly positive news and should bring some relief to oil prices and ultimately to consumers," said Carsten Brzeski, global head of macro analysis at ING.

“However, the question is whether, even if Iran claims to open the Strait, will ships actually dare to pass through? Insurers and shipowners may still be reluctant to send ships, meaning that even if it opens in theory, traffic through the Strait will only increase gradually.”

Energy stocks that benefit from higher oil prices fell. European oil and gas stocks fell 4.5% (.SXEP), opens a new tab, followed by U.S. majors Exxon Mobil (XOM.N), opens a new tab and Chevron (CVX.N), opens a new tab, which each lost about 5%. Airline stocks rose, with American Airlines (AAL.O), opens a new tab up about 8%.

Government bonds rose, with the yield on the 10-year U.S. Treasury note touching its lowest level since mid-March and last seen falling 7.5 basis points to 4.234%. The 2-year note, which typically tracks expectations of interest rate moves by the Federal Reserve, fell 7.6 basis points to 3.702%.

Treasuries had held up better than European bonds since the war began because the United States, as a net energy exporter, is relatively protected from rising energy prices.

Traders cut bets that the price increases would prompt the European Central Bank and the Bank of England to raise interest rates on Friday, helping German 10-year Bunds fall 7.5 basis points to 2.958%. Germany's rate-sensitive 2-year yield fell 10.7 basis points to 2.417%.

“If we move to a situation where the path is still towards de-escalation – but now we have the bonus of goods flows through Hormuz returning to something resembling a normal level that we saw before the conflict – then that is obviously eliminating a pretty big risk to the economy,” said Michael Brown, senior research strategist at Pepperstone.

“I think that’s why the markets are reacting so positively.”

The dollar also fell and was on track for a second straight weekly decline as investors recovered positions in the safe-haven currency. The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.51% to 97.71.