An Iranian flag flies as a woman walks past buildings damaged as part of a 10-day ceasefire between Lebanon and Israel, in the southern suburbs of Beirut, Lebanon, April 20, 2026.
Marko Djurica | Reuters
“Complacent” investors risk being wrong-footed if they continue to misread developments in the Iran war, analysts said after markets reacted to the brief reopening of the Strait of Hormuz on Friday, but their hopes were dashed.
Growing investor optimism about an end to hostilities in the Gulf has helped propel stocks higher since a two-week ceasefire was agreed between the United States and Iran on April 7. Tehran’s announcement on Friday that the strait was open to navigation sparked a strong market reaction.
The S&P 500 gained 4.5% last week, while the Nasdaq Composite jumped 6.8%. The latter also recorded his 13th consecutive winning session on Friday, equaling a streak not seen since 1992.
But global stock markets weakened on Monday, reversing their trend as traffic on the strait once again he stopped.
The fragile ceasefire is set to expire on Tuesday, and some strategists have warned that investors risk misinterpreting how news about the conflict is reflected in market movements.
Matt Gertken, chief geopolitical strategist at BCA Research, said investors had adapted to respond to the US president. Donald Trumpsince his “day of liberation” last year, but he must understand that Trump is not in complete control of events in the Middle East.
“The market thinks it’s like a ‘liberation day’ – that President Trump can raise the temperature but then turn it down at the perfect time, and he’s the maestro,” he told CNBC.Squawk Europe Box” on Monday.
“But we might be in a different situation now, because Iran has been attacked and their pain threshold is higher.”
Friday’s jubilation over the reopening of the Strait of Hormuz – through which 20% of the world’s supply of oil and liquefied natural gas passes – was short-lived, as Iran announced its closure again the next day. The resumption of uninterrupted energy flows is what underpins any sustainable recovery in stock markets, according to investment manager Orbis.
“It’s pretty clear to us that the stock markets are looking at things with a glass half full,” Patrick O’Donnell, chief investment strategist at Orbis, told CNBC.Europe First edition” on Monday.
“What we are focused on is whether the Strait of Hormuz will actually reopen.”
He added that the ramifications of the conflict in the Middle East will have “a fairly lasting effect” on the global economy and markets.
BCA’s Gertken also said Trump, whose Republican Party is facing an election year, has yet to secure guarantees on Iran’s nuclear capabilities — one of the White House’s main war goals.
“Over a 12-month horizon, investors should take this seriously – they should not rest on their laurels in the face of the crisis,” he added.
Deutsche Bank also called for caution in a note published on Monday.
Its head of macro research, Jim Reid, cited an “uncomfortable” comparison with recent history – the S&P 500’s more than 10% rally in the early weeks of the 2022 Ukraine war, as brief optimism about an early negotiated settlement left investors “disappointed.” The overall U.S. index then fell about 25% from its January peak to its October trough, ending the year with a 19% decline, its worst performance since 2008.
“This episode is a clear wake-up call,” he added.
Correction: The Nasdaq Composite rose 6.8% last week. An earlier version incorrectly stated the percentage.
