Did the market really believe in the ceasefire?
2026-04-02 02:05:00
Over the past two days (Tuesday, March 31 and Wednesday, April 1), global financial markets saw a significant rebound in risk appetite, strongly stimulated by rumors of a ceasefire related to the Iran-Israel-US conflict. Stock markets rebounded strongly, while oil prices came under pressure and fell. However, the bond and foreign exchange markets remained relatively cautious, with overall volatility still prominent, and the market has not completely escaped the shadow of geopolitical uncertainty.
US stocks performed particularly well: On March 31, the Dow Jones Industrial Average surged approximately 1,125 points, or 2.49%, to close at 46,341.51; the S&P 500 rose 2.91%, and the Nasdaq Composite jumped 3.83%, marking its best single-day performance in nearly a year. On April 1, while the upward momentum slowed somewhat, it remained positive, with the Dow rising another 400 points (a gain of approximately 0.6%-0.8%), and the S&P 500 and Nasdaq rising slightly by about 0.6% and 1%, respectively. European stocks followed suit, with the Stoxx Europe 600 index rising approximately 2.3%, the German DAX index rising 2.8%, and the French CAC40 index rising 2.2%. Asian markets also saw a significant jump after opening, reflecting the rapid spread of global investors' optimistic expectations for a swift resolution to the conflict.
In the bond market, global bond yields fluctuated slightly: US Treasuries initially fell due to improved risk sentiment, but the 10-year yield subsequently rebounded slightly to around 4.31%-4.35%, remaining at a relatively high level overall. This indicates that while investor concerns about inflationary pressures and long-term geopolitical risks have eased somewhat, they have not completely subsided. Prices of safe-haven assets such as gold also saw a mild pullback, further confirming that short-term "risk-on" trading dominates the market.
In the foreign exchange and commodity markets, oil prices have become the most sensitive indicator. WTI crude oil fell by about $1.60 to around $99.78 per barrel, driven by rumors; Brent crude oil briefly fell below $100 per barrel before recovering slightly to around $102, with a maximum daily drop of nearly 4%. This decline was mainly due to market expectations of a possible reopening of the Strait of Hormuz and a reduced risk of energy supply disruptions. The US dollar index remained relatively stable but weakened slightly, reflecting a moderate shift of funds from safe-haven assets to risk assets. Overall, the stock market recovered strongly from the previous war-induced slump over the past two days, while the bond market and oil prices showed that the market quickly priced in "vague optimism," but no trend reversal has occurred, and investors are still closely watching for further hard signals.
Has the market "believed" and entered a ceasefire?
The core driver of this rebound lies in the interplay between Trump's publicly tough rhetoric and Iran's peaceful signals, creating a market narrative of "substantial progress" in negotiations. Trump explicitly declared on social media that Iran's "new regime president"—a leader "far less radical and smarter than his predecessor"—had just requested a ceasefire from the United States, and that the US would consider this request, provided that the Strait of Hormuz was "open, free, and unobstructed." He also stated that the US could end its military operations in Iran "within two to three weeks," claiming that the core objective (weakening the Iranian nuclear threat) had been largely achieved and that a formal written agreement was unnecessary. This statement, released before the US stock market opened, quickly ignited investor enthusiasm.
Meanwhile, Iranian President Masoud Pezeshkian, in a phone call with the President of the European Council on March 31, stated that Iran "has the necessary will to end this conflict," but only if "basic conditions" are met, particularly "security guarantees" to prevent aggression from recurring. He emphasized that the key to resolving the issue is an immediate cessation of the "aggressive attacks" by the US and Israel, and demands for compensation for damages and recognition of Iran's legitimate rights. These relatively mild statements were interpreted by the market as a signal of flexibility from Iran, further strengthening the credibility of the ceasefire expectation.
The cumulative effect led to a rapid rush to buy risky assets, and the subsequent drop in oil prices further reinforced optimism, creating a short-term positive feedback loop. However, this wave of "belief" masks multiple structural cracks, and market optimism may simply be a temporary respite under Trump's "strategic ambiguity," rather than the beginning of a genuine ceasefire.
First, Trump has repeatedly postponed and exaggerated the progress of the negotiations . In recent weeks, Trump has repeatedly released similar optimistic signals, such as announcing a suspension of strikes against Iranian energy facilities at the end of March, extending the deadline to April 6, or claiming that the US and Iran were engaged in "serious negotiations," but has repeatedly failed to deliver on a substantial ceasefire. This time, he again set the end timeframe at "within two to three weeks" and unilaterally interpreted the Iranian president's statement as a "request for a ceasefire." Historical experience shows that such statements are often used as market management and bargaining chips, rather than as a firm commitment. Investors vividly remember that similar statements about "a deal being reached soon" caused several rollercoaster-like fluctuations in the early stages, and the market's wariness of Trump's "artistic exaggeration" has not completely disappeared.
Second, the bombing has not stopped, and the exchange of fire appears to be escalating . Despite widespread rumors of a ceasefire, US-Israeli military operations against Iran continue. From March 31 to April 1, cities such as Tehran and Isfahan suffered large-scale airstrikes, including the use of massive bunker buster bombs against military facilities in mountainous areas, causing powerful secondary explosions. Iran continued to retaliate with missiles and drones, and reports from central Israel indicate missile interceptions or debris causing injuries (at least 14 people). The actual restriction on passage through the Strait of Hormuz has not been lifted, and attacks on energy facilities continue. The intensity of the conflict has not only failed to decrease substantially, but has also shown signs of stalemate or even escalation on some battlefields, a stark contrast to Trump's statement that it would "end soon."
Third, the number of participants is increasing: the roles of Oman, the UK, and others are becoming more complex . The original conflict framework is expanding. Oman, as a traditional mediator, has repeatedly suffered casualties and damage to facilities from Iranian missiles and drones, shifting its role from pure mediation to passive involvement. While the UK did not directly participate in the initial offensive strikes, it has explicitly supported defensive operations, allowing the US military to use its bases in the Middle East and strengthening its regional presence through the Royal Air Force and Marine Corps. Meanwhile, several Gulf states (including Saudi Arabia, the UAE, and Qatar) have directly or indirectly taken sides in response to Iran's retaliatory strikes, participating in interception or providing logistical support. The involvement of more actors not only increases the difficulty of coordination but may also prolong the conflict's end rather than accelerate the ceasefire process.
Fourth, if the Iranian government's statements are credible, then this is a complete hoax . The Iranian Foreign Ministry spokesperson explicitly responded that Trump's claim of an "Iranian request for a ceasefire" is "false and baseless." Foreign Minister and other officials denied ever making any ceasefire requests to the US, only stating that they were "reviewing" relevant proposals, but emphasizing that they "have no intention of negotiating under the current conditions." Pezeshkyan's statements have always come with strict preconditions—cessation of aggression, provision of security guarantees, and compensation. If the Iranian official narrative is credible, then Trump's story is a one-sided exaggeration or even misleading statement; the so-called "ceasefire agreement" lacks any basis in mutual consensus, and market optimism is built on a fragile one-sided interpretation.
Fifth, the market's oscillation amidst ambiguous expectations effectively limited oil price increases . By repeatedly releasing vague signals that the situation would "end soon" and "conclude within two or three weeks," Trump successfully created a short-term window of market optimism, preventing oil prices from surging to $150 per barrel as even the most pessimistic predictions suggested. This alleviated domestic inflationary pressures and reduced fuel costs for consumers in the US, while also preserving sufficient room for negotiation and military flexibility for the US. This "market-driven" tactic is frequently seen in Trump's past operations: market oscillations amidst ambiguous expectations avoided extreme panic and prevented runaway oil prices from escalating global economic risks.
Sixth, the US previously stated it was considering acquiring uranium from Iran . One of the core strategic objectives of the US is to completely weaken Iran's nuclear capabilities, including acquiring or destroying its stockpile of highly enriched uranium (reportedly close to 60%-89% enrichment, nearing the weapons-grade threshold), and dismantling key nuclear facilities such as Natanz and Fordow. Although Trump claimed that the "nuclear threat has been significantly reduced," there is no conclusive public evidence to date that the US military has controlled or removed this uranium material. Some reports even indicate that the Trump team seriously considered ground operations to seize the uranium stockpile. If this key objective is far from being achieved, the so-called "victory narrative" remains more of a propaganda exercise than a substantial military achievement.
Seventh, Trump's remarks may further trigger financial turmoil . Over the past month, every contradictory or abrupt statement by Trump (sometimes a strong threat to "bomb Iran back to the Stone Age," sometimes a sudden conciliatory statement saying it would be "over in two to three weeks") has triggered sharp fluctuations in oil prices and the stock market. During March, US stocks had already experienced a significant correction due to the uncertainty of the war. Although energy stocks initially benefited from supply concerns, the overall market simultaneously suffered from the dual impact of inflationary pressures and slowing economic growth.
A speech tomorrow (April 2nd) is expected to likely trigger similar turmoil again. The White House has confirmed that Trump will deliver a national address at 9 p.m. local time on Wednesday, providing a "significant update" on the conflict with Iran. Given his previous style, this speech is highly likely to again mix optimistic ceasefire signals with tough military threats—such as reiterating that "it can end without a formal agreement," emphasizing that the Strait of Hormuz must be fully open or it will continue to be "bombed into the Stone Age," or offering a unilateral interpretation of statements made by Iran's new leader.
Historical experience shows that such ambiguous and inconsistent statements often lead to sharp market reactions in a short period of time: optimistic interpretations may temporarily boost the stock market and depress oil prices, while any wording that is perceived as "not clear enough" or "further escalation" will quickly reverse sentiment, triggering a rebound in oil prices and a sell-off of risky assets.
US stocks performed particularly well: On March 31, the Dow Jones Industrial Average surged approximately 1,125 points, or 2.49%, to close at 46,341.51; the S&P 500 rose 2.91%, and the Nasdaq Composite jumped 3.83%, marking its best single-day performance in nearly a year. On April 1, while the upward momentum slowed somewhat, it remained positive, with the Dow rising another 400 points (a gain of approximately 0.6%-0.8%), and the S&P 500 and Nasdaq rising slightly by about 0.6% and 1%, respectively. European stocks followed suit, with the Stoxx Europe 600 index rising approximately 2.3%, the German DAX index rising 2.8%, and the French CAC40 index rising 2.2%. Asian markets also saw a significant jump after opening, reflecting the rapid spread of global investors' optimistic expectations for a swift resolution to the conflict.
In the bond market, global bond yields fluctuated slightly: US Treasuries initially fell due to improved risk sentiment, but the 10-year yield subsequently rebounded slightly to around 4.31%-4.35%, remaining at a relatively high level overall. This indicates that while investor concerns about inflationary pressures and long-term geopolitical risks have eased somewhat, they have not completely subsided. Prices of safe-haven assets such as gold also saw a mild pullback, further confirming that short-term "risk-on" trading dominates the market.
In the foreign exchange and commodity markets, oil prices have become the most sensitive indicator. WTI crude oil fell by about $1.60 to around $99.78 per barrel, driven by rumors; Brent crude oil briefly fell below $100 per barrel before recovering slightly to around $102, with a maximum daily drop of nearly 4%. This decline was mainly due to market expectations of a possible reopening of the Strait of Hormuz and a reduced risk of energy supply disruptions. The US dollar index remained relatively stable but weakened slightly, reflecting a moderate shift of funds from safe-haven assets to risk assets. Overall, the stock market recovered strongly from the previous war-induced slump over the past two days, while the bond market and oil prices showed that the market quickly priced in "vague optimism," but no trend reversal has occurred, and investors are still closely watching for further hard signals.
Has the market "believed" and entered a ceasefire?
The core driver of this rebound lies in the interplay between Trump's publicly tough rhetoric and Iran's peaceful signals, creating a market narrative of "substantial progress" in negotiations. Trump explicitly declared on social media that Iran's "new regime president"—a leader "far less radical and smarter than his predecessor"—had just requested a ceasefire from the United States, and that the US would consider this request, provided that the Strait of Hormuz was "open, free, and unobstructed." He also stated that the US could end its military operations in Iran "within two to three weeks," claiming that the core objective (weakening the Iranian nuclear threat) had been largely achieved and that a formal written agreement was unnecessary. This statement, released before the US stock market opened, quickly ignited investor enthusiasm.
Meanwhile, Iranian President Masoud Pezeshkian, in a phone call with the President of the European Council on March 31, stated that Iran "has the necessary will to end this conflict," but only if "basic conditions" are met, particularly "security guarantees" to prevent aggression from recurring. He emphasized that the key to resolving the issue is an immediate cessation of the "aggressive attacks" by the US and Israel, and demands for compensation for damages and recognition of Iran's legitimate rights. These relatively mild statements were interpreted by the market as a signal of flexibility from Iran, further strengthening the credibility of the ceasefire expectation.
The cumulative effect led to a rapid rush to buy risky assets, and the subsequent drop in oil prices further reinforced optimism, creating a short-term positive feedback loop. However, this wave of "belief" masks multiple structural cracks, and market optimism may simply be a temporary respite under Trump's "strategic ambiguity," rather than the beginning of a genuine ceasefire.
First, Trump has repeatedly postponed and exaggerated the progress of the negotiations . In recent weeks, Trump has repeatedly released similar optimistic signals, such as announcing a suspension of strikes against Iranian energy facilities at the end of March, extending the deadline to April 6, or claiming that the US and Iran were engaged in "serious negotiations," but has repeatedly failed to deliver on a substantial ceasefire. This time, he again set the end timeframe at "within two to three weeks" and unilaterally interpreted the Iranian president's statement as a "request for a ceasefire." Historical experience shows that such statements are often used as market management and bargaining chips, rather than as a firm commitment. Investors vividly remember that similar statements about "a deal being reached soon" caused several rollercoaster-like fluctuations in the early stages, and the market's wariness of Trump's "artistic exaggeration" has not completely disappeared.
Second, the bombing has not stopped, and the exchange of fire appears to be escalating . Despite widespread rumors of a ceasefire, US-Israeli military operations against Iran continue. From March 31 to April 1, cities such as Tehran and Isfahan suffered large-scale airstrikes, including the use of massive bunker buster bombs against military facilities in mountainous areas, causing powerful secondary explosions. Iran continued to retaliate with missiles and drones, and reports from central Israel indicate missile interceptions or debris causing injuries (at least 14 people). The actual restriction on passage through the Strait of Hormuz has not been lifted, and attacks on energy facilities continue. The intensity of the conflict has not only failed to decrease substantially, but has also shown signs of stalemate or even escalation on some battlefields, a stark contrast to Trump's statement that it would "end soon."
Third, the number of participants is increasing: the roles of Oman, the UK, and others are becoming more complex . The original conflict framework is expanding. Oman, as a traditional mediator, has repeatedly suffered casualties and damage to facilities from Iranian missiles and drones, shifting its role from pure mediation to passive involvement. While the UK did not directly participate in the initial offensive strikes, it has explicitly supported defensive operations, allowing the US military to use its bases in the Middle East and strengthening its regional presence through the Royal Air Force and Marine Corps. Meanwhile, several Gulf states (including Saudi Arabia, the UAE, and Qatar) have directly or indirectly taken sides in response to Iran's retaliatory strikes, participating in interception or providing logistical support. The involvement of more actors not only increases the difficulty of coordination but may also prolong the conflict's end rather than accelerate the ceasefire process.
Fourth, if the Iranian government's statements are credible, then this is a complete hoax . The Iranian Foreign Ministry spokesperson explicitly responded that Trump's claim of an "Iranian request for a ceasefire" is "false and baseless." Foreign Minister and other officials denied ever making any ceasefire requests to the US, only stating that they were "reviewing" relevant proposals, but emphasizing that they "have no intention of negotiating under the current conditions." Pezeshkyan's statements have always come with strict preconditions—cessation of aggression, provision of security guarantees, and compensation. If the Iranian official narrative is credible, then Trump's story is a one-sided exaggeration or even misleading statement; the so-called "ceasefire agreement" lacks any basis in mutual consensus, and market optimism is built on a fragile one-sided interpretation.
Fifth, the market's oscillation amidst ambiguous expectations effectively limited oil price increases . By repeatedly releasing vague signals that the situation would "end soon" and "conclude within two or three weeks," Trump successfully created a short-term window of market optimism, preventing oil prices from surging to $150 per barrel as even the most pessimistic predictions suggested. This alleviated domestic inflationary pressures and reduced fuel costs for consumers in the US, while also preserving sufficient room for negotiation and military flexibility for the US. This "market-driven" tactic is frequently seen in Trump's past operations: market oscillations amidst ambiguous expectations avoided extreme panic and prevented runaway oil prices from escalating global economic risks.
Sixth, the US previously stated it was considering acquiring uranium from Iran . One of the core strategic objectives of the US is to completely weaken Iran's nuclear capabilities, including acquiring or destroying its stockpile of highly enriched uranium (reportedly close to 60%-89% enrichment, nearing the weapons-grade threshold), and dismantling key nuclear facilities such as Natanz and Fordow. Although Trump claimed that the "nuclear threat has been significantly reduced," there is no conclusive public evidence to date that the US military has controlled or removed this uranium material. Some reports even indicate that the Trump team seriously considered ground operations to seize the uranium stockpile. If this key objective is far from being achieved, the so-called "victory narrative" remains more of a propaganda exercise than a substantial military achievement.
Seventh, Trump's remarks may further trigger financial turmoil . Over the past month, every contradictory or abrupt statement by Trump (sometimes a strong threat to "bomb Iran back to the Stone Age," sometimes a sudden conciliatory statement saying it would be "over in two to three weeks") has triggered sharp fluctuations in oil prices and the stock market. During March, US stocks had already experienced a significant correction due to the uncertainty of the war. Although energy stocks initially benefited from supply concerns, the overall market simultaneously suffered from the dual impact of inflationary pressures and slowing economic growth.
A speech tomorrow (April 2nd) is expected to likely trigger similar turmoil again. The White House has confirmed that Trump will deliver a national address at 9 p.m. local time on Wednesday, providing a "significant update" on the conflict with Iran. Given his previous style, this speech is highly likely to again mix optimistic ceasefire signals with tough military threats—such as reiterating that "it can end without a formal agreement," emphasizing that the Strait of Hormuz must be fully open or it will continue to be "bombed into the Stone Age," or offering a unilateral interpretation of statements made by Iran's new leader.
Historical experience shows that such ambiguous and inconsistent statements often lead to sharp market reactions in a short period of time: optimistic interpretations may temporarily boost the stock market and depress oil prices, while any wording that is perceived as "not clear enough" or "further escalation" will quickly reverse sentiment, triggering a rebound in oil prices and a sell-off of risky assets.
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