An Iranian flag waves as a woman walks past damaged buildings amid a 10-day ceasefire between Lebanon and Israel in the southern suburbs of Beirut, Lebanon, on April 20, 2026.
Marco Jurica | reuters
After markets reacted to Friday’s brief reopening of the Strait of Hormuz, analysts said “complacent” investors risk a misstep by misreading developments in the Iran war that could dash their hopes.
Growing investor optimism over an end to hostilities in the Gulf has helped lift stocks since a two-week ceasefire was agreed between the US and Iran on April 7. Tehran’s announcement on Friday that the strait was open to shipping prompted a strong market reaction.
The S&P 500 gained 4.5% last week, while the Nasdaq Composite gained 7.2%. The latter also recorded its 13th consecutive winning season on Friday, matching a streak not seen since 1992.
But global equity markets faltered on Monday, bringing traffic across the strait to a halt once again.
The fragile ceasefire is set to expire on Tuesday, and some strategists warn that investors risk misreading how news about the conflict is reflected in market movements.
Matt Gertken, chief geopolitical strategist at BCA Research, said investors have adapted to respond to US President Donald Trump’s tariff announcements since his “liberation day” last year, but they should understand that Trump is not completely in control of events in the Middle East.
“The market is assuming this is like ‘Liberation Day’ — that President Trump can raise the temperature but then lower the temperature at the right time, and he’s a master,” he told CNBC’s “Squawk Box Europe” on Monday.
“But we may be in a different situation now, because Iran has been attacked, and they have a higher pain threshold.”
Friday’s joy that the Strait of Hormuz – through which 20% of the world’s oil and gas supplies pass – had reopened was short-lived, as Iran announced it would close it again the next day. According to investment manager Orbis, the restoration of uninterrupted energy flows is the foundation of any sustained stock market recovery.
“It’s quite clear to us that equity markets are looking at things from a ‘glass half full’ perspective,” Patrick O’Donnell, chief investment strategist at Orbis, told CNBC’s Europe Early Edition on Monday.
“Our focus is on whether the Strait of Hormuz is actually going to reopen.”
He said the conflict in the Middle East would have a “significant long-term impact” on the global economy and markets.
BCA’s Gertken also said Trump, whose Republican Party faces an election year, has not yet secured guarantees on Iran’s nuclear capabilities — one of the White House’s key war aims.
“Over a twelve-month period, investors should take this seriously – they should not be cavalier about the crisis,” he said.
Deutsche Bank also urged caution in a note on Monday.
Its head of macro research, Jim Reed, cited an “uncomfortable” comparison with recent history – the S&P 500 rallied more than 10% in the early weeks of the war in Ukraine in 2022, as brief optimism over an early negotiated solution left investors “disappointed”. The major US indexes fell nearly 25% from the January peak to the October low, and ended the year with a 19% decline – its worst performance since 2008.
“That episode is a clear warning sign,” he said.
