An Iranian flag flies as a woman walks in front of a damaged building during the 10-day ceasefire between Lebanon and Israel in the southern suburbs of Beirut, Lebanon, April 20, 2026.
Marco Julica | Reuters
Analysts said “complacent” investors risked continuing to misread developments in the Iran war and going in the wrong direction, after markets reacted to Friday’s brief reopening of the Strait of Hormuz only to have their hopes dashed.
Growing investor optimism about an end to hostilities in the Gulf has helped boost stocks since a two-week ceasefire was agreed between the United States and Iran on April 7. Iran’s announcement on Friday that the strait would be opened to shipping triggered a strong market reaction.
Last week, the S&P 500 rose 4.5% and the Nasdaq Composite rose 6.8%. The latter also recorded 13 consecutive wins in Friday’s session, tying a winning streak not seen since 1992.
But on Monday, global stock markets slumped and reversed course as traffic across the Straits came to a halt again.
The fragile cease-fire is set to expire on Tuesday, and some strategists have warned that investors risk misreading how news about the conflict will be reflected in market movements.
Matt Gertken, chief geopolitical strategist at BCA Research, said investors have adjusted to react to President Donald Trump’s tariff announcements since last year’s “Emancipation Day,” but they should understand that Trump is not in complete control of the situation in the Middle East.
“The market believes this is like ‘Emancipation Day,’ which means President Trump can raise the temperature and then lower it at the right time, and he’s a maestro,” he told CNBC’s “Squawk Box Europe” on Monday.
“But Iran has been attacked and they have a higher pain threshold, so they may be in a different situation now.”
Friday’s jubilation over the reopening of the Strait of Hormuz, through which 20% of the world’s oil and liquefied natural gas supplies pass, was short-lived, but the next day Iran announced it was closed again. According to investment management company Orbis, the resumption of uninterrupted energy flow will support a sustained recovery in the stock market.
“It’s clear that the stock market is looking at things in a ‘glass half full’ way,” Orbis chief investment strategist Patrick O’Donnell told CNBC’s “Europe Early Edition” on Monday.
“What we’re looking at is whether the Strait of Hormuz will actually reopen.”
He added that the fallout from the Middle East conflict will have “quite long-term effects” on the global economy and markets.
BCA’s Gertken also said Republican President Trump, heading into an election year, has yet to secure guarantees for Iran’s nuclear capabilities, one of the White House’s main war goals.
“Investors should take this seriously over a 12-month period. They should not become complacent about the crisis,” he added.
Deutsche Bank also urged caution in a memo on Monday.
Jim Reid, head of macro research, cited an “uncomfortable” comparison with recent history, in which the S&P 500 rose more than 10% in the early weeks of the 2022 Ukraine war, and said tentative optimism about an early negotiated settlement had “disappointed” investors. The U.S. composite index fell about 25% from its peak in January to its trough in October, ending the year with its worst decline of 19% since 2008.
“That episode is a clear red flag,” he added.
Correction: The Nasdaq Composite rose 6.8% last week. Percentages were listed incorrectly in previous versions.
