Global markets on Wednesday reflected both hopes for an end to the U.S. war with Iran and caution with respect to the uncertainties that still linger over the month-long conflict as investors regroup into the first day of the second quarter.
U.S. stocks ended March on a massive upswing, with the S&P 500 booking its best single-day advance since May, following comments from President Donald Trump, as well as overtures from officials in Tehran, that suggested the war could come to an end over the next few weeks.
Major indexes around the world responded in kind, with Europe’s Stoxx 600 on the way to its best gain in more than a year and Japan’s Nikkei 225 surging more than 5% for its biggest single-day rebound since April of 2025.
The U.S. gains left the S&P 500 down 4.6% for the quarter, and nearly 6.5% from the record high it reached in late January, but far enough away from correction territory to soothe nerves on Wall Street heading into the start of the first-quarter earnings season in mid-April.
The president will address the nation with “an important update on Iran”, according to White House press secretary Karoline Leavitt, at 9 p.m. Eastern time.
“If Trump is declaring mission accomplished, then so are we regarding our stock market correction call,” said Ed Yardeni, founder and president of Yardeni Research.
“We will probably lower our recession odds from 35% back to 20% once we have a better handle on whether the conflict in the Persian Gulf is actually over,” he added. “We reserve the right to change our minds as often as the President does.”
That reality has global oil markets trading more cautiously, with Brent crude still north of the $100 mark, and U.S.-based WTI not far behind at $99.43 a barrel, as plans for reopening the crucial Strait of Hormuz shipping channel remain unsettled.
Trump’s remarks that Western allies who refused to support the U.S. in its war effort should “start learning how to fight for yourself,” as well as reports that the administration is considering leaving the NATO alliance, do not bode well for security around the world’s most important energy transit even after the conflict concludes.
That likely keeps oil and energy prices elevated well into the summer months, and possibly beyond, keeping Treasury bond yields higher and blunting the chances of a Federal Reserve rate cut.
Still, comments from Fed Chair Jerome Powell, which suggested the central bank would look through a short-term surge in oil prices as it calibrates its next policy move, has pulled short-term Treasury yields sharply lower this week—with 2-year notes trading at around 2.75% in early Wednesday dealing.
The larger issue for stocks heading into the second quarter, however, is likely to be the speed and sustainability of the nascent recovery. The S&P Stocks is still around 1.5% south of its 200-day moving average, a key performance benchmark that was breached on March 20.
Reclaiming that threshold, pegged at 6624 points, over the next few days will be crucial in firming up sentiment ahead of the first round of bank-sector earnings on April 14.
Thomas Mathews, head of Asia Pacific markets at Capital Economics, thinks oil markets may complicate that task, at least over the near term.
“Higher energy prices would remain an economic drag which would contribute to keeping major equity indices from immediately returning to their previous highs,” he wrote in an update published Wednesday.
“That said, we suspect they’d get there eventually: our end-2026 forecast for the S&P 500, for example, is 7500: that compares favorably with its pre-war high of ~7000 and its close on Tuesday of around 6,500, but less so with our pre-war forecast of 8000,” he added.
Write to Martin Baccardax at martin.baccardax@barrons.com