South African assets have rallied as optimism over a possible end to the Iran conflict pushed oil prices lower, strengthened the rand and drove local bond yields to their lowest levels since the war began at the end of February. The rand firmed for a second straight day while South Africa’s blended 10-year bond yield fell for a fifth consecutive session, even as local markets were closed for the Youth Day holiday. The government’s borrowing rate has dropped to 8.34%, from a peak of 9.27% a month into the conflict, though it remains above the 7.9% level seen just before the first strikes. The rand has gained about 1% over two days and traded at a best rate of R16.13/$ on Monday, while gold rose on safe-haven demand and oil prices fell on hopes that supply disruptions will ease. Lower oil prices could reduce inflation pressure after the Reserve Bank raised interest rates last month in response to the war’s knock-on effects. The market rally came despite uncertainty over US President Donald Trump’s claim that a preliminary agreement had been signed, extending the fragile April ceasefire by 60 days and ostensibly reopening the Strait of Hormuz. Trump said the deal was “a wall to a nuclear weapon” for Iran, while Iranian President Masoud Pezeshkian called it an “important step” towards ending the fighting but said a final truce “has yet to take shape”. Negotiators are due to begin the next phase of talks in Switzerland on Friday, with the future of Iran’s nuclear programme still unresolved and questions over its support for armed proxies and missile programme not thought to be on the agenda. The conflict has killed at least 7,000 people, mostly in Iran and Lebanon, and disrupted global energy markets. The Strait of Hormuz, which normally carries about a fifth of global oil and liquefied natural gas trade, is expected to reopen from Friday, but shippers warned traffic may recover only gradually because of possible mines and the need for co-ordination with Iran’s Revolutionary Guards.