US Stocks Near Recovery from Post-Iran War Decline, Oil Remains Elevated on Hormuz Strait Risk

BlockBeats News, April 10th: According to CNBC, the U.S. stock market is nearing a recovery from the drop caused by the "Iran War," as investors increasingly bet that the geopolitical impact will be short-lived. However, the oil market remains more cautious. The two-week ceasefire agreement announced on Tuesday night fueled a stock market rebound, triggering a round of "relief rally," helping the stock indexes recover more than two-thirds of their losses since the conflict broke out in late February. The S&P 500 index is currently less than 1% below its pre-war level (6,878.88 points).

Meanwhile, due to ongoing concerns about the Middle East supply bottleneck, the crude oil price remains elevated. Barclays strategists stated in a client report: "The stock market's expectation of a 'good outcome' is significantly higher than the oil market, with stock index performance clearly outperforming the pullback in oil futures." They pointed out that this round of rebound was partly driven by "strong short-covering," as short positions were forced to close during the rally.

Barclays also stated that investor confidence in President Trump's seeking of an "exit strategy" to avoid further economic losses is strengthening. "In our view, further de-escalation remains the most reasonable outcome, as Trump needs an exit plan to address the escalating political and economic costs," the bank noted. Citigroup strategists also expressed a similar view, believing that Tuesday's ceasefire has shifted market sentiment. "Despite remaining uncertainties, the U.S.-Iran finding an 'exit strategy' is a positive signal itself, although the path to an agreement is clearly not a straight line. Investors have significantly reduced their risk exposure, and if the ceasefire holds, they may be tempted to re-enter the market, indicating that the rebound may still have room to continue."

In contrast, the oil market is still pricing in a more cautious scenario, as tensions around the Strait of Hormuz persist, and key shipping lanes remain mostly closed. The May-delivery U.S. West Texas Intermediate (WTI) crude oil futures approached $100 per barrel on Friday, compared to around $67 before the war broke out.