Ceasefire Relief: What the US-Iran Truce Means for Oil, Equities, and Currencies

Author: Fabien Yip, Market Analyst, IG

Publication Date: April 8, 2026

Overview

A fragile truce between the US and Iran, brokered by Pakistan, has led to a market relief rally. However, the damage from six weeks of conflict raises uncertainties about a full recovery.

Details of the Truce

In a last-minute intervention, President Trump announced a two-week suspension of military action against Iran, contingent on Iran's agreement to reopen the Strait of Hormuz. Iran accepted the terms, allowing safe passage through the strait, which is crucial for global oil supply.

The ceasefire is not a peace agreement; it includes a 10-point proposal from Iran, which calls for the withdrawal of US forces and lifting of sanctions. Formal negotiations are set to begin in Islamabad, but significant differences remain between the two sides.

Market Impact of the Conflict

The conflict, which began on February 28, has severely impacted global markets:

• WTI crude oil futures surged by 69%.
• European natural gas prices increased by 61%.
• Asian equities, particularly South Korea's KOSPI, saw significant drawdowns.
• The US Dollar index rose by approximately 2%, while safe-haven currencies like the Swiss franc gained around 4%.
• Emerging market currencies in Asia faced severe depreciation.
• Government bonds sold off, leading to higher yields and a decline in gold and silver prices.

Immediate Market Reactions

Following the announcement of the truce, markets experienced a relief rally:

• The Nikkei 225 rebounded by approximately 5%.
• Brent crude oil prices fell by 16%.
• S&P 500 futures rose by 2.5%.

However, silver lagged behind, recovering only 35% of its maximum drawdown due to prior speculative positioning.

Future Outlook

While markets that experienced the largest drawdowns are likely to recover quickly, several structural constraints may limit the extent of this recovery:

• The ceasefire is temporary, and negotiations may not yield a comprehensive peace agreement.
• Reopening the Strait of Hormuz will take time, affecting oil prices.
• Infrastructure damage from the conflict will have long-term implications for energy supply.
• Central banks face ongoing challenges balancing inflation and growth.

Investors are advised to remain cautious, as the next two weeks will be critical in determining whether the market gains are sustainable.

Technical Analysis

The Japan 225 index has shown signs of recovery, breaking above a key resistance level. The US Tech 100 index has also reclaimed its 200-day moving average, but sustained gains will require confirmation beyond short-term fluctuations.

Conclusion

The ceasefire between the US and Iran has provided a temporary reprieve for markets, but the underlying uncertainties and structural challenges suggest that a full recovery may take time.