Last week began with Iran rejecting a ceasefire offer, the US bombing petrochemical plants, and Trump's latest ultimatum being implemented. In the middle of the week, however, a two-week ceasefire agreement brokered by Pakistan, signed in the last 90 minutes, literally reversed everything, with Brent plummeting by 13-17%. But this doesn't mean "everyone won." The ceasefire is fragile, and the negotiations resemble an unfinished game of chess. The real lesson for investors last week lies not in the prices, but in the dynamics.
Last week opened with harsh news on Sunday night: Iran officially rejected the temporary ceasefire framework proposed by the US on April 5th. Following this, Trump, on Tuesday, sent a message – not via Twitter, but directly through official statements – that "if the Strait of Hormuz is not opened, we will strike Iran's energy infrastructure and bridges." The first two days of the week were spent in this tension. Global markets remained cautious. On Monday, the S&P 500 closed just 0.44% higher around 6,600 points; investors were unable to find a clear direction. Brent crude continued to hover around $110. However, a data point in the US broke through this mixed picture: March non-farm payrolls came in at 178,000, almost three times expectations; unemployment fell from 4.4% to 4.3%. The strong employment news gave the market hope; however, it also kept alive the fear that "the Fed will not cut interest rates, or may even raise them."
At midnight on April 7th, 90 minutes before Trump's "last-minute" ultimatum expired, a two-week temporary ceasefire was signed between the US and Iran through the mediation of the Pakistani Prime Minister. The core of the agreement was simple: the US and Israel would halt military operations, and Iran would open the Strait of Hormuz to cargo ships. The market reaction was immediate and sharp:
Brent crude oil fell 13–17% in a single day; While the spot price was still hovering around $124, futures prices fell to approximately $94–95. The Strait of Hormuz crossing remained problematic, but futures markets had already begun pricing in the future. The S&P 500 rose 2.51% to reach $6,780; the Dow Jones experienced one of its strongest daily gains in history, acquiring 1,295 points. Aviation and travel stocks surged: Carnival rose 11%, while United and American Airlines gained 5–8%. European stock markets saw one of their biggest daily gains of the year. Asian markets responded with double-digit gains the following morning; Japan's Nikkei rose approximately 4%, and South Korea's Kospi increased by 5%.
On the day of the truce, the Federal Reserve's March meeting minutes were also released. The minutes showed that some Fed officials considered the possibility of an interest rate hike. This represents a significant departure from the easing path the Fed has been following since the end of 2024. The minutes highlight the "risk of inflation remaining persistently high compared to the target" stemming from energy prices as a prominent concern. Some participants expressed their belief that there were arguments for an interest rate hike if the situation warranted it. This goes far beyond the "few officials" at the January meeting. The bond market immediately read this message: the 10-year US Treasury yield fell 8 basis points to 4.24% with the ceasefire, while short-term rates remained relatively more resilient. The market's expectation of a "single rate cut in 2026" is effectively collapsing: bond markets are now pricing in an interest rate hike as the most likely next step.
This week's story for gold was also dramatic. Having lost approximately 25% of its value since the start of the war, gold was trading in the $4,700–$4,800 spot market range prior to the ceasefire, pricing in geopolitical uncertainty. A short-lived risk appetite rally following the ceasefire put pressure on gold; investors moved out of the safe haven and into equities and other risky assets. However, the correction in gold remained limited. Amidst the fragility of the ceasefire, uncertainty about whether the Strait of Hormuz will fully open, and the pricing in of the risk of a Fed interest rate hike, "central bank purchases" continued. China continued to increase its gold reserves this week (for the 17th consecutive month). Gold chose to consolidate in the $4,700–$4,740 range after the ceasefire. The message for investors: gold is shaping itself this week around Fed uncertainty, not war. While oil is falling, inflation expectations are not; therefore, a "recalibration" strategy seems more realistic than a "rushed exit" in gold funds.
A second sharp decline in Brent could occur if tanker traffic in the Strait of Hormuz begins to return to normal. The Fed's late April meeting: will the bond market's pricing of a "hike possibility" translate into a real policy move? The most important lesson learned last week is this: if global markets react so violently to a single headline, then the "scenario resilience" of personal portfolios has become at least as important as yield.
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