Global markets shifted back into risk-off mode as optimism surrounding the US–Iran ceasefire quickly faded, reinforcing the fragile nature of current sentiment. Equities declined while oil prices surged, after Iranian officials indicated that multiple aspects of the ceasefire agreement had already been violated. The move highlights how markets remain heavily driven by geopolitical headlines rather than underlying fundamentals.
Asian equities led the downturn, with the regional benchmark falling as selling pressure broadened across sectors. Futures in both the US and Europe also moved lower, signaling that the recent four-day rally in global equities may be losing momentum. Meanwhile, bond markets reflected a more cautious tone, with US Treasuries holding relatively stable while global yields faced pressure amid renewed inflation concerns linked to rising energy prices.
Oil markets remain at the center of attention. After experiencing a sharp decline earlier, crude prices rebounded strongly as uncertainty surrounding the Strait of Hormuz intensified. Reports of restricted shipping flows and ongoing security risks continue to support a geopolitical risk premium in energy markets. The situation was further escalated by Israel’s largest military assault on Lebanon since the start of its invasion, underscoring that broader regional tensions remain unresolved.
On the geopolitical front, the US maintained a firm stance, signaling that military presence in the region will continue until a “real agreement” is fully honored. At the same time, Iran is exploring alternative shipping routes in response to rising maritime threats. Discussions around potential US sanctions relief on Venezuela also added another layer of complexity to the global energy outlook.
Across other asset classes, Bitcoin edged lower, reflecting softer risk appetite, while gold traded in a volatile range as investors weighed safe-haven demand against shifting sentiment. In equities, technology stocks came under pressure following new developments in the AI space, contributing to the broader market weakness.
Importantly, markets are also awaiting the final revision of US GDP (Q4 2025) due later today, which could act as a key macro catalyst. The previous estimate showed growth slowing to around 0.7%, and expectations suggest no major revision, but any surprise could shift expectations around Federal Reserve policy and broader risk sentiment.
Overall, markets are transitioning from a short-lived “ceasefire relief rally” back into a phase of uncertainty. The key takeaway is that this is not a stable risk-on environment, but a headline-driven market where sentiment can reverse quickly. Until there is clear confirmation of sustained de-escalation and normalization in energy flows, volatility is expected to remain elevated across global markets.
By Amir Amidian
Senior Market Analyst | Zylostar
