“Complacent” investors risk getting wrong-footed as 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, only for their hopes to be dashed.
Growing investor optimism over an end to hostilities in the Gulf has helped propel stocks higher since a two-week ceasefire was agreed between the U.S. and Iran on April 7. Tehran’s announcement on Friday that the Strait was open to shipping spurred a strong market response.
The S&P 500 gained 4.5% last week, while the Nasdaq Composite popped 7.2%. The latter also posted its 13th consecutive winning session on Friday, matching a streak not seen since 1992.
But global equity markets faltered on Monday, reversing course as traffic on the Strait once again ground to a halt.
The fragile ceasefire is set to expire on Tuesday, and some strategists have warned that investors are at risk of misreading how news about the conflict is reflected in market movements.
