Global markets are showing early signs of recovery following the announcement of a temporary ceasefire between the US and Iran, with equities moving higher and oil prices easing. The move has helped calm immediate fears around supply disruption, especially through the Strait of Hormuz, while also reducing short-term inflation concerns.
Indeed, oil prices fell below $95 per barrel following the ceasefire announcement, helping lift global equities and improve investor sentiment. But, analysts cited in those reports warned that the improvement reflects short-term relief rather than a fundamental shift, with geopolitical risks and supply uncertainty still lingering.
And, for all intents and purposes, it certainly seems like trepidation is not a bad bet.
Relief, Not Resolution
Mark Pacitti, Founder and CEO at Woozle Research, said the market reaction reflects the removal of immediate worst-case scenarios rather than a structural change: “This is relief, not a regime change. Markets were pricing in an existential supply shock – Brent was up over 40% since the conflict began, the Straight of Hormuz effectively closed off a fifth of the world’s oil and gas. A two-week ceasefire removes the immediate tail risk, hence the violent unwind.
“But structural uncertainty hasn’t just disappeared. Iran has signaled its intent to regulate (and charge for) straight passage, which is a new geopolitical variable the market hasn’t fully priced. Gold and Treasuries are still being bid even as equities have a relief rally, which tells you investors haven’t fully removed their hedges. When the two weeks run out, expect volatility to snap back as unless a durable framework is credibly in place… again not a given!”
Energy Costs May Not Immediately Fall
Even as markets react positively, businesses may not see immediate pricing relief. John Haw, CEO of Fidelity Energy, said energy markets tend to price in risk over longer periods: “Even if a ceasefire holds, businesses shouldn’t assume prices will quickly return to pre-conflict levels.
“Energy markets don’t simply reset when tensions ease. They price in risk over time, and that’s reflected in forward contracts. While recent developments may reduce some of the ‘fear premium’, there are still additional costs built in to account for ongoing uncertainty and underlying pressures. From potential supply disruption to longer-term impacts like damaged infrastructure, these will continue to influence pricing. It’s worth noting that the pricing we are seeing in the markets today is still well below that of the last energy crisis.
“We’re already seeing that in practice. One large gas user we work with was quoted around £191,000 per year at the end of January, and that’s now closer to £235,000 for the same contract window.
“For many businesses, the impact of events like this isn’t just immediate; it carries forward into pricing for months afterward. That creates a lag between what’s happening in the headlines and what businesses actually pay, making it important to stay engaged with the market and consider options at the right time.”
Short-Term Moves Or Long-Term Direction?
Nathaniel Tilton, Managing Principal, Wealth Advisor at Tilton Wealth Management, said the market response reflects how quickly sentiment can shift around geopolitical events: “While capital markets tend to fluctuate wildly on short-term noise, particularly with economic and geopolitical uncertainty, it’s the health and strength of the companies within the markets themselves that ultimately dictate longer-term direction.
“Certainly, in the case of the war in Iran, we have seen a market decline. There has been tremendous uncertainty around how this would disrupt oil price and inflation, but also why we see that a 2-week truce results in a speedy market recovery.”
Yet, Tactical Optimism Remains
Andrew Bahlmann, Co-Founder at Deal Leaders International, said the improvement in sentiment appears cautious rather than decisive. According to Bahlmann, “today’s stock rally will be relief-based, rather than an indication of a fundamental shift. Similar to what we have witnessed at Deal Leaders International through our work with clients regarding geopolitical issues, when there are near-term geopolitical events that ease tensions (i.e. deal-making), sentiment improves for the near-term; however, the amount of price risk that has been embedded into the marketplace remains cautious.
“At present, investor optimism appears to be tactical. Investors are returning to risky assets, but their commitment does not appear to be all-in. As such, within active client portfolios, we continue to observe clients purchasing downside protection and pricing in potential volatility scenarios. To me, this indicates that the overall marketplace continues to remain wary.
“If the current ‘truce’ holds, then I believe that there will likely be some stabilization of the marketplace. However, if the truce were to fail or if renewed tensions arose, there would likely be a rapid repricing of equities, commodities and currencies. The primary risk I perceive is the potential for the marketplace to become too comfortable with itself. As we know, when the marketplace moves rapidly based on news headline(s) – it is also capable of reversing direction just as rapidly.”
Calm – or Now – But Uncertainty Remains
The ceasefire has helped ease immediate fears around energy supply disruption and inflation, supporting early signs of recovery across global markets. It certainly is a good thing, generally speaking, but it’s good relative to how bad and volatile things have been up until this point.
And experts seem to think so, too. Indeed, continued hedging activity, cautious positioning and persistent energy pricing pressures suggest investors are not yet convinced the volatility is over.
For now, markets appear to be welcoming the pause in tensions. But with the ceasefire temporary and structural risks still in place, the broader question remains whether the world can breathe easy, or whether volatility is simply on pause.
Frustratingly, there’s not much to be done other than wait and see.
Our Experts
- John Haw: CEO of Fidelity Energy
- Mark Pacitti: Founder and CEO at Woozle Research
- Nathaniel Tilton: Managing Principal, Wealth Advisor at Tilton Wealth Management
- Andrew Bahlmann: Co-Founder at Deal Leaders International
John Haw, CEO of Fidelity Energy
“Even if a ceasefire holds, businesses shouldn’t assume prices will quickly return to pre-conflict levels.
“Energy markets don’t simply reset when tensions ease. They price in risk over time, and that’s reflected in forward contracts. While recent developments may reduce some of the ‘fear premium’, there are still additional costs built in to account for ongoing uncertainty and underlying pressures. From potential supply disruption to longer-term impacts like damaged infrastructure, these will continue to influence pricing. It’s worth noting that the pricing we are seeing in the markets today is still well below that of the last energy crisis.
“We’re already seeing that in practice. One large gas user we work with was quoted around £191,000 per year at the end of January, and that’s now closer to £235,000 for the same contract window.
“For many businesses, the impact of events like this isn’t just immediate; it carries forward into pricing for months afterward. That creates a lag between what’s happening in the headlines and what businesses actually pay, making it important to stay engaged with the market and consider options at the right time.”
Mark Pacitti, Founder and CEO at Woozle Research
“This is relief, not a regime change. Markets were pricing in an existential supply shock – Brent was up over 40% since the conflict began, the Straight of Hormuz effectively closed off a fifth of the world’s oil and gas. A two-week ceasefire removes the immediate tail risk, hence the violent unwind.
“But structural uncertainty hasn’t just disappeared. Iran has signaled its intent to regulate (and charge for) straight passage, which is a new geopolitical variable the market hasn’t fully priced. Gold and Treasuries are still being bid even as equities have a relief rally, which tells you investors haven’t fully removed their hedges. When the two weeks run out, expect volatility to snap back as unless a durable framework is credibly in place… again not a given!”
Nathaniel Tilton, Managing Principal, Wealth Advisor at Tilton Wealth Management
“While capital markets tend to fluctuate wildly on short-term noise, particularly with economic and geopolitical uncertainty, it’s the health and strength of the companies within the markets themselves that ultimately dictate longer-term direction.
“Certainly, in the case of the war in Iran, we have seen a market decline. There has been tremendous uncertainty around how this would disrupt oil price and inflation, but also why we see that a 2-week truce results in a speedy market recovery.”
Andrew Bahlmann, Co-Founder at Deal Leaders International
“I believe that today’s stock rally will be relief-based, rather than an indication of a fundamental shift. Similar to what we have witnessed at Deal Leaders International through our work with clients regarding geopolitical issues, when there are near-term geopolitical events that ease tensions (i.e. deal-making), sentiment improves for the near-term; however, the amount of price risk that has been embedded into the marketplace remains cautious.
“At present, investor optimism appears to be tactical. Investors are returning to risky assets, but their commitment does not appear to be all-in. As such, within active client portfolios, we continue to observe clients purchasing downside protection and pricing in potential volatility scenarios. To me, this indicates that the overall marketplace continues to remain wary.
“If the current ‘truce’ holds, then I believe that there will likely be some stabilization of the marketplace. However, if the truce were to fail or if renewed tensions arose, there would likely be a rapid repricing of equities, commodities and currencies. The primary risk I perceive is the potential for the marketplace to become too comfortable with itself. As we know, when the marketplace moves rapidly based on news headline(s) – it is also capable of reversing direction just as rapidly.”
