- Initial euphoria over the US-Iran ceasefire has been replaced by caution
- European equities are retreating, with the STOXX 600 sliding 0.6% and Germany’s DAX shedding 1.3%
- The “peace dividend” is being questioned as Brent crude claws back ground to trade around $97 a barrel
- The high price of oil suggests an inflationary surge is “baked into” upcoming data, leading traders to still price in two 25-basis-point hikes from the ECB before year-end.
The relief rally that swept through global markets on Wednesday has hit a significant roadblock this morning. As we move through the European session, the initial euphoria surrounding the US-Iran ceasefire is being replaced by a cold dose of reality.
Asian Session Recap: Cracks in the Ceasefire
Asian markets started the day on a cautious footing as reports emerged of potential breaches in the fragile two-week truce.
The MSCI Asia Pacific Index slid 0.9%, with Japan’s Nikkei struggling to maintain its footing after yesterday’s monster 5.4% rally.The primary concern for the region remains the Strait of Hormuz. Despite the ceasefire agreement, Iran’s continued influence over the waterway and reports of “tolls” for safe passage have kept shipping markets on edge.
The RBNZ also caught some attention, holding rates steady as expected but maintaining a hawkish tilt, warning of further action if the recent energy-led inflation spike becomes entrenched.
European Session: Oil Rebounds, Equities Retreat
The initial euphoria has shifted to caution, with the STOXX 600 sliding 0.6% to 609.59.
The retreat is widespread across the continent:
- Germany’s DAX is leading the downside, shedding 1.3%.
- France’s CAC 40 has retreated 0.7%.
The “peace dividend” that saw oil prices collapse by nearly $20 yesterday is already being questioned. Brent crude has clawed back some ground, trading around $97 a barrel after Tehran warned that the terms of the deal were not being fully respected.
The sector rotation today tells the story of a market moving back into a defensive crouch:
- The Losers: Cyclical and growth sectors are feeling the heat. Industrials are down 1%, while Luxury stocks have plunged 2.3%. Travel, Banks, and Tech have all slipped into the red, surrendering a portion of yesterday’s outsized gains.
- The Outperformer: Energy is the lone bright spot, gaining 0.9%. This comes as oil prices creep higher, reflecting the market’s skepticism that the supply chokepoint in the Middle East will be resolved anytime soon.
The Inflation “Hangover”
While Brent crude hasn’t yet reclaimed the $100 level, a small silver lining for the bulls, it remains roughly 40% higher than pre-conflict levels. This is the “inflationary ghost” haunting the ECB and the Fed.
Even with the ceasefire, the lag in energy costs suggests an inflationary surge is already baked into upcoming data.
Eurozone bond yields are ticking higher today as traders realize that a two-week truce doesn’t necessarily mean a dovish pivot. Markets are still pricing in two 25-basis-point hikes from the ECB before year-end.
Currency Markets: The flight-to-safety trade has moderated slightly, but the US Dollar remains resilient.
- EUR/USD is hovering near 1.1660, struggling to extend its recent recovery.
- GBP/USD is sitting around 1.3390, eyeing the 1.3400 handle but lacking the momentum to break through.
- USD/JPY is trading near 158.80, as the Yen remains the laggard in this high-volatility environment.
Currency Power Balance
Source: OANDA Labs
The Outlook: All Eyes on Washington and Islamabad
The rest of the day will likely be dominated by headlines regarding the upcoming Saturday morning talks in Islamabad. Markets are desperate for a permanent solution, but the “fragility” of this truce suggests we aren’t out of the woods yet.
Key Levels to Watch:
- Brent Crude: $100 remains the psychological line in the sand. A move back above this could reignite stagflation fears.
- S&P 500 Futures: Currently down 0.2%, watch the 5200 level for support if the “reality check” intensifies.
US Core PCE (Due later): We are expecting a 0.4% rise. If this comes in hot, it will remind markets that even if peace holds, the inflationary “hangover” from the last five weeks of conflict is far from over.
For all market-moving economic releases and events, see the MarketPulse Economic Calendar. (click to enlarge)
Chart of the Day – WTI Oil
WTI crude (US Oil) is currently undergoing a “reality check” following the massive sell-off from the $115.00 peak. On the H4 chart, the price action has found immediate support around the $94.00 – $95.00 zone, but the recovery is struggling to clear the 100-period SMA (purple line) currently sitting at $98.89.
The RSI has bounced from oversold territory but remains capped below the 50-midline, suggesting the prevailing momentum is still skewed to the downside. While we are seeing a minor relief rally, the series of lower highs persists.
- Resistance: A break above $100.00 is essential to shift the intraday bias toward a retest of the $107.50 level.
- Support: Failure to hold $94.00 could see a swift slide toward the 200-period SMA (yellow line) near $88.83, which aligns with the key psychological and structural support at $90.00.
WTI Oil Four-Hour (H4) Chart, April 9, 2026
Source: TradingView.com (click to enlarge)
Note: Traders should be wary of “headline risk” today. We saw yesterday how quickly sentiment can pivot on a single announcement. Until we see actual tankers moving freely through the Strait without “tolls” or military escort, the risk remains skewed to the upside for commodities and downside for risk assets.
Stay nimble.
