Deutsche Bank reported that S&P 500 futures rebounded after a US–Iran two-week ceasefire announcement. Futures are now less than 2% below pre-strike levels and above late-March lows.
S&P 500 futures rose 2.48%, leaving them under 2% below the February 27 level before the Iran strikes began. They are also 6.8% above the March 30 closing low.
Risk Assets Surge On Ceasefire News
NASDAQ futures increased 3.15%. Euro STOXX 50 futures rose 5.42% after a weak session the previous day.
Markets had earlier traded cautiously amid reports of escalating strikes by the US, Israel and Iran across the Middle East. The report also cited a social media post from Trump warning that a “whole civilisation will die tonight” unless “something revolutionarily” happens on Iran’s side.
US markets later recovered as reports emerged that the US and Iran were considering Pakistan’s ceasefire proposal. The article was produced using an AI tool and reviewed by an editor, and attributed to the FXStreet Insights Team.
Given the sharp rally in risk assets, we see the primary immediate change in market volatility. The CBOE Volatility Index (VIX), which had surged to over 35 during the peak tensions in late March, has collapsed by over 30% to below 24 on this news. For the coming weeks, this suggests a strategy of selling volatility, such as writing covered calls or initiating credit spreads to capitalize on declining premiums.
With S&P 500 futures rebounding so strongly, we should consider positioning for further upside now that a major geopolitical risk is being priced out. The market is now less than 2% from its February highs, and with this overhang removed, fundamentals can again take focus. This environment favors buying call options on broad market indices like the SPY and QQQ to participate in a potential trend continuation.
Energy And Safe Haven Reversals
The ceasefire’s location in the Strait of Hormuz has a direct impact on energy markets. WTI crude oil, which had climbed above $105 per barrel last week on fears of supply disruption, has already fallen more than 8% to trade below $97. We anticipate this trend will continue, making put options on energy sector ETFs like XLE an attractive hedge or speculative position against falling oil prices.
We are also seeing a reversal in safe-haven assets that rallied during the conflict. Gold has given back its recent gains, and U.S. 10-year Treasury yields have jumped from below 3.60% to over 3.85% as money flows out of bonds and back into equities. This unwind presents opportunities to bet against assets like gold miners (GDX) or long-duration Treasury bond ETFs (TLT).
