Markets in relief: three days in which geopolitics mattered more than data

Wednesday: Maximum pressure on Iran, but Wall Street looks beyond

On Wednesday, the market began to price in a specific scenario: the United States increased pressure on Tehran, effectively cutting off its maritime trade, but the White House continued to filter optimism about new talks. Trump said the war was "near the end," while Reuters reported a possible return to negotiations in Pakistan as early as this weekend. The result was a less fearful market than expected: the S&P 500 rose 0.80% to 7,022.95 points, the Nasdaq 1.60% to 24,016.02, while the Dow Jones lost just 0.15% to 48,463.72. Oil prices, while still high, also stopped rallying as they had on the worst days, with Brent around $96 and WTI near $92.

Asia and global markets are breathing again

Optimism did not linger on Wall Street. Between Wednesday night and Thursday morning, Asian stock markets followed the US rebound: the MSCI Asia-Pacific ex-Japan index rose 1.2%, the Nikkei hit a new high of 2.2%, and the MSCI All-Country World index rose 0.3%, a record high. At the same time, the dollar continued to lose some of the safe-haven premium it had accumulated during the weeks of war. The message was simple: the markets weren't saying the conflict was over, but that the risk of an uncontrolled escalation was diminishing.

Thursday: Lebanon and Israel agree a truce, but the economy remains uncertain.

On Thursday, optimism found concrete evidence: the entry into force of a 10-day ceasefire between Lebanon and Israel. Trump also said that a new meeting between the United States and Iran could take place over the weekend. US stocks continued to react strongly, but more cautiously: the Dow Jones rose 0.24% to 48,578.72 points, the S&P 500 rose 0.26% to 7,041.28, and the Nasdaq rose 0.36% to 24,102.70, with the tech stock index posting its twelfth consecutive positive session. However, beneath the surface, the macro picture was less rosy: US manufacturing production in March fell 0.1% versus expectations of +0.1%, overall industrial production fell 0.5%, and auto production fell 3.7%. In practice, the market was celebrating geopolitics while the real economy continued to send mixed signals.

The corporate stories that accompanied the rally

Corporate news also helped set the tone. Stellantis reported first-quarter deliveries up 12% to approximately 1.4 million vehicles, with North America up 17% and Greater Europe up 12%, reinforcing the idea of a recovery for the group. On the other hand, Netflix became one of the few real weak spots on Friday: the stock fell more than 10% after cautious guidance and the announcement of co-founder Reed Hastings' departure; if the decline had been confirmed at the close, the loss in value would have exceeded $44 billion. The sentiment surrounding Starlink, however, was different: Reuters reported that app downloads and monthly active users more than doubled in the first quarter, with 1.2 million downloads in the United States, a user base of over 10 million since February, and SpaceX valued at around $1.75 trillion ahead of its IPO.

Friday: Hormuz reopens, oil down, Wall Street at record highs

The real turning point came on Friday, when Iranian Foreign Minister Abbas Araqchi declared the Strait of Hormuz "fully open" for trade during the truce. At that point, the market recalculated everything in a matter of hours: less risk for energy logistics, less pressure on inflation, and therefore more room for equities. Brent crude closed at $90.38, down 9%, while WTI fell 11.45% to $83.85. Meanwhile, the 10-year US Treasury note fell to 4.246% and the 2-year note to 3.7%, while the dollar index fell to 98.19 after hitting a seven-week low of 97.632. On the stock market side, the Dow jumped 1.79% to 49,447.43 points, the S&P 500 jumped 1.20% to 7,126.06 and the Nasdaq rose 1.52% to 24,468.48, all at highs, with the Nasdaq gaining its thirteenth consecutive session.

The sectors that best explain the week

When oil prices plunge in a single session, it's easy to see who wins and who loses. On Friday, airlines and the travel industry were among the main beneficiaries: United Airlines gained 7%, Royal Caribbean 7.3%, and Carnival 7%. Conversely, energy became the main drag on the S&P 500: Exxon lost 3.6%, Chevron 2.2%, and the energy sector closed down 2.9%.

Why the market believed in the truce so quickly

One final detail helps understand the tone of these three sessions. On Friday, France and the United Kingdom led a meeting of 49 countries in Paris to prepare for a possible multinational defense mission in the Strait of Hormuz, and Keir Starmer said that more than a dozen countries are ready to contribute their own assets. This doesn't mean the crisis is over. It does, however, mean that, for the first time in weeks, the financial world has begun to see not only a truce, but also a possible framework for managing the aftermath. And that's why the markets reacted this way between Wednesday and Friday: oil prices down, rates down, a weaker dollar, and stocks at record highs.