Markets rebound as Mideast ceasefire sparks relief, oil slides, but tensions persist

Global financial markets opened the week cautiously optimistic after a tentative ceasefire between Israel and Iran eased immediate fears of escalation. However, skepticism remains high as isolated attacks and conflicting statements test the truce’s durability. While stocks are climbing and oil is retreating, geopolitical uncertainty and shifting energy dynamics continue to weigh on sentiment. Below is a comprehensive breakdown of today’s market developments:

Ceasefire relief lifts equities, but fragile calm prevails

Global equities gained ground after US President Trump announced a ceasefire agreement between Israel and Iran. Markets welcomed the temporary de-escalation after nearly two weeks of heightened conflict that rattled financial markets and pushed oil toward $80 per barrel.

• S&P 500 futures rose 0.8%, signaling a second day of gains.
• Euro Stoxx 50 climbed 1.3%, with broader European indices advancing.
• MSCI Asia Pacific gained 2.2%, its biggest daily rise in over a month.
• Nasdaq 100 futures added 1.1%, supported by tech and energy optimism.
• Emerging market stocks rose 2.3%, tracking the global risk-on mood.

However, optimism remains tempered by Israel’s accusations that Iran violated the ceasefire by launching missiles, prompting Israel to vow a military response. Iran denied the allegations.

Oil slides as market eyes surplus and tests ceasefire

Crude prices slumped after the ceasefire announcement, unwinding much of the geopolitical risk premium:

• Brent crude plunged as much as 5.6%, before paring losses to trade near $69 a barrel.
• WTI crude dropped 3.4%, settling at $66.20 a barrel.
• Tanker stocks and energy companies led equity declines in Europe.
• The price slump brings the market back to pre-conflict levels, with traders now focused on looming oversupply, driven by OPEC+ reactivating idled capacity.

Despite the ceasefire, Israeli defense forces reported identifying missile launches from Iran, pushing oil briefly off its lows before resuming the downtrend.

Currencies react: Dollar slides, yen and risk currencies rise

Currency markets reflected a cautious unwind of recent haven flows:

• Bloomberg Dollar Spot Index fell 0.4%, reversing some recent strength.
• Euro rose 0.2% to $1.1600, while Sterling climbed 0.7% to $1.3612.
• Japanese yen gained 0.7%, outperforming other havens.
• Offshore yuan was little changed at 7.1743 per dollar.

Risk-sensitive currencies like the Australian and New Zealand dollars led gains among G-10 peers, buoyed by hopes of reduced geopolitical uncertainty.

Commodities: Gold retreats, broader energy complex softens

Gold prices declined as haven demand eased, though the metal remains elevated given the fragile risk environment:

• Spot gold fell 1.3% to $3,325 per ounce, tracking improved risk sentiment.
• European natural gas prices slumped up to 13%, with shipping disruption fears fading.
• US LNG exports resumed after maintenance, adding supply to global markets.

The backwardation in Brent futures narrowed sharply, reflecting fading immediate supply concerns.

Central bank focus returns: Fed and ECB in the spotlight

With geopolitical tensions easing for now, markets are shifting attention back to monetary policy:

• 10-year US Treasury yields held steady at 4.35%.
• German Bund yields climbed 4 basis points to 2.54%.
• UK Gilts gained 3 basis points, reflecting improving market sentiment.

Traders await testimony from Fed Chair Jerome Powell, with expectations building around policy guidance and inflation outlooks.

Corporate developments to watch

• Nvidia’s CEO began selling stock, with plans to offload up to $865 million this year.
• Google faces further antitrust scrutiny from UK regulators.
• Spain’s BBVA takeover of Banco Sabadell faces new conditions.
• Grifols faces legal challenges over plasma pricing linked to family ownership.

Outlook: Cautious optimism but geopolitical risks linger

While the ceasefire has provided temporary relief, the situation remains fluid:

• Markets are watching for confirmation of a lasting truce or potential re-escalation.
• Oil markets may face renewed volatility if hostilities resume, especially around key maritime chokepoints like the Strait of Hormuz.
• Attention is shifting back to US trade policies and tariffs, particularly amid renewed pressure to finalize agreements ahead of political deadlines.

For now, markets are enjoying a fragile rebound, but defensive positioning and heightened sensitivity to headlines remain prudent.

Prepared by Nour Hammoury, Chief Market Analyst at SquaredFinancial
Nour is an investor, independent market strategist, and financial advisor. He holds a BA in Finance and Banking Science from Al-Ahliyya Amman University and a CFTe in Economics from the International Federation of Technical Analysts. He has more than 15 years of experience in forex, stocks, and global economic developments, as well as central bank policies and intermarket analysis. He appears regularly on major international TV networks, such as BBC, Al-Jazeera, Al Hurra, CNBC, and Bloomberg, holding open discussions and sharing insights and readings of the markets and trends.

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