Ceasefire relief: what the US-Iran truce means for oil, equities and currencies

A deal struck in the final hours

Just hours before President Trump's deadline for Iran expired, Pakistan brokered a last-minute intervention that averted what could have been a catastrophic military escalation. Trump announced that the US would suspend its bombing campaign for two weeks, contingent on Iran's agreement to fully reopen the Strait of Hormuz, through which a fifth of global oil supply passes. Iran confirmed its acceptance shortly afterwards, with Foreign Minister Abbas Araghchi stating that safe passage through the waterway would be possible under coordination with Iranian armed forces.

The ceasefire is by no means a peace agreement. Iran's 10-point proposal — which Trump described as a 'workable basis on which to negotiate' — reportedly includes the withdrawal of US combat forces from the region, the lifting of sanctions, and continued Iranian control over the strait. Formal talks are expected to begin on Friday in Islamabad. The wide gap between the two sides' stated positions, conflicting signals over ceasefire in Lebanon and reports of missile alerts sounding in Israel and the UAE shortly after the announcement all serve as sober reminders that the next fourteen days will be anything but straightforward.

Six weeks of damage: the toll on asset classes

The conflict has inflicted considerable damage on global markets since hostilities commenced on 28 February. Energy markets bore the brunt of the shock: WTI crude oil futures surged 69% over the period, while European natural gas prices rallied 61%, reflecting the combined effect of the Strait of Hormuz closure and the strike on power facilities.

Equities suffered broadly, with Asian markets underperforming sharply given the region's heavy dependence on Middle Eastern energy imports. South Korea's KOSPI recorded a maximum drawdown of 19%, while the onshore China CSI 300 index fared better with a 6% drawdown. The US Dollar index advanced approximately 2% while the Swiss franc gained around 4% on safe-haven demand. By contrast, Asian emerging markets currencies came under severe pressure: India's rupee, the Indonesian rupiah, and the Philippine peso all fell to record lows against the dollar in March, and South Korea's won plunged to a 17-year low.

Government bonds sold off as markets priced in prolonged inflationary pressure from elevated energy costs, pushing yields meaningfully higher. This rise in real rates also drove the counterintuitive decline in gold and silver, which fell as much as 17% and 28% respectively.

Major asset class performance since 27 February 2026

Major currency performance since 27 February 2026

The relief rally: real, but incomplete

Markets responded with immediate relief to Trump's announcement. Asian equities led the recovery in early Wednesday trading, with the Nikkei 225 rebounding approximately 5% and the Hang Seng Index up around 3% in the morning session. Brent crude oil fell as much as 16% on the news, while S&P 500 futures rose 2.5% in overnight trading. As of the morning session, many major markets have recouped roughly half of their losses incurred since the war began. Silver is a notable outlier, recovering only around 35% of its maximum drawdown. Its sharper pre-war rally had attracted significant speculative and leveraged positioning, much of which was forcibly unwound during the conflict and is unlikely to be quickly rebuilt.

Major equity indices performance since 27 February 2026

What comes next

Markets that suffered the deepest drawdowns during the conflict are likely candidates for the sharpest near-term recovery. From a sector perspective, materials — sold off heavily on rising interest rate expectations — and technology, which is acutely sensitive to growth conditions, appear well positioned to outperform during the relief rally. Energy, by contrast, is expected to give back a portion of its earlier gains as the immediate supply shock premium unwinds.

That said, investors should resist the temptation to treat this as an all-clear signal. Several structural constraints will limit the extent of any recovery. The ceasefire is temporary and the details remain sparse. Iran's 10-point proposal and Washington's stated positions retain substantial differences, and the Islamabad talks carry no guarantee of success. Even the reopening of the Strait of Hormuz — subject to Iran's 'technical limitations' — will take weeks, if not months, before shipping backlogs are cleared and supply chains normalise. Crude oil prices are therefore unlikely to revert to pre-war levels in the near term.

Infrastructure damage inflicted during the six-week conflict cannot be quickly reversed. Ras Laffan, the world's largest liquefied natural gas (LNG) export complex, had 17% of Qatar's export capacity knocked offline, with repairs expected to take three to five years according to QatarEnergy's chief executive. The disruption to supply will weigh on energy prices well beyond any ceasefire window.

Beyond the physical supply constraints, six weeks of conflict will leave a discernible mark on growth, particularly across energy-import-dependent economies in Asia — though the hope is that this proves a temporary supply shock rather than a lasting drag on output.

For central banks, the ceasefire provides some breathing space but does not resolve the underlying dilemma between inflation and growth. Expectations of a Federal Reserve (Fed) rate hike this year are likely to moderate for now, offering some support to rate-sensitive assets. However, volatility will remain a constant companion so long as a comprehensive peace agreement remains out of reach. Investors positioned for a prolonged conflict may use the relief rally as an opportunity to trim exposure, and some profit-taking later this week would not be surprising.

The next fourteen days matter enormously in determining whether markets can sustain gains or are simply enjoying a temporary reprieve.

Technical outlook

The sharp recovery on Wednesday has validated the formation of a double-bottom pattern in the Japan 225 index. With the index breaking above the neckline at approximately 54,600, the correction appears complete and the index has resumed its uptrend. The neckline now serves as the new support level, with the next upside target at around 58,600.

Japan 225 daily chart

The US Tech 100 index has reclaimed its 200-day moving average through the relief rally, while technical momentum has also improved, with the relative strength index (RSI) breaking above its prevailing downtrend line. That said, a sustained close above 25,200 over several sessions would be required to confirm this is more than a dead cat bounce fuelled by a temporary ceasefire.

US Tech 100 daily chart

• _{Source: TradingView. The figures stated are as of 8 April 2026. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.}