Key Takeaways:
A US-brokered ceasefire between Israel and Hezbollah takes effect at 4 PM Friday, ending the deadliest day of fighting since the US-Iran deal paused the wider war in West Asia.
Israel and Hezbollah agreed to a ceasefire starting at 4 PM local time Friday, a US official said, after Israeli airstrikes killed 18 people in southern Lebanon and four Israeli soldiers died in a Hezbollah drone attack.
"The ceasefire will take effect at 4 PM local time," the US official said, speaking on condition of anonymity as the deal was being finalized.
The agreement follows the deadliest day of hostilities since the US and Iran agreed Monday to halt the wider war. Israel's military said it struck more than 80 Hezbollah targets overnight, including command centers and launch positions, killing dozens of militants. Hezbollah responded with rocket and mortar attacks on Israeli troops near Nabatieh, while four IDF soldiers — including Lieutenant Colonel Dor Gedalia Ben Simhon — were killed by an explosive drone, the military said. The Lebanese Health Ministry reported 33 wounded across at least 10 villages and towns.
The ceasefire tests whether diplomatic channels can hold where a previous April accord failed. Hezbollah drew Lebanon into the conflict in early March after the killing of Iran's supreme leader, and repeated violations of the April truce had eroded confidence in any pause. With US-Iran talks already halted by the flare-up, the next 48 hours will determine whether this ceasefire holds.
The deal represents a sharp reversal from Friday morning, when Israeli hardliners demanded escalation. Far-right National Security Minister Itamar Ben Gvir called for "all of Lebanon to burn" after the soldiers' deaths, while the military pressed its largest single-day campaign since the ground invasion began. A reserve officer was severely wounded and four other soldiers lightly injured in a separate drone impact, the military said.
US officials including President Donald Trump had grown frustrated with Israel's continued campaign in Lebanon despite the April ceasefire and the broader US-Iran negotiations. The US-Iran deal, announced Monday, was meant to halt the wider war in West Asia that began in early March when Hezbollah attacked Israel to avenge the killing of Iran's supreme leader at the start of the US-Israeli military campaign.
Market Implications
For markets, the ceasefire removes a key geopolitical risk premium that had built up over the past week. Crude oil prices are expected to decline as supply disruption fears ease — the conflict had raised concerns about broader regional instability affecting energy infrastructure in a region that handles about 21 percent of global oil trade through the Strait of Hormuz. Safe-haven demand for gold and the US dollar may also soften, while equity index futures point to a risk-on open as the geopolitical premium embedded in options pricing unwinds.
The previous April ceasefire had temporarily calmed markets before unraveling within weeks. This time, the involvement of the US and Iran in the broader framework may give the pause more durability, though the deep mistrust between the parties remains a risk. Investors will watch for official confirmation from both sides in the coming hours.
This article is for informational purposes only and does not constitute investment advice.
