Middle-East Update: A tentative ceasefire
The US and Iran declared a tentative 14-day ceasefire early on 8 April 2026 before Asia markets opened. Investors cheered the news; stocks in Asia rallied, Brent oil fell precipitously and the USD eased. While today’s news is a much-welcomed development, geopolitical uncertainties remain.
For this risk-on rally to be sustained, the US, Iran and Israel must translate this ceasefire into durable peace.
A final resolution is far from guaranteed
While I remain cautiously optimistic, investors should be aware of the complexities before reaching a “forever peace.”
The Iranians’ proposed 10-point plan1 is entirely at odds with President Trump’s 15-point peace plan proposed in March.
For example, both sides still disagree whether Iran’s uranium enrichment program should remain intact or be completely dismantled.
There are many other significant disagreements. Forthcoming negotiations will be arduous and a final resolution is far from guaranteed.
The Strait of Hormuz remains the key focus
Economically, what investors care about the most is whether the Strait of Hormuz will finally become unblocked, as promised by the Iranian side.
In their proposal, the Iranians promised safe passage for ships via coordination with the country’s armed forces with consideration of technical limitations.2
Sources: Invesco Strategy & Insights, Bloomberg L.P., International Energy Agency (IEA), Our World In Data, as of 6 April 2026
This is evident in energy markets. Oil prices have retreated to about US$95/bbl in Asian trading on 8 April 2026 from highs near US$110/bbl late Tuesday though still substantially above their pre‑war level of around US$70/bbl.
I still believe that oil prices are likely to remain elevated near current levels given the geopolitical uncertainty.
Asian economies are impacted disproportionately by the Middle East conflict given their reliance on energy imports.
The possible opening of the Strait gives policymakers in Asia an opportunity to start negotiating with the Iranian side for safe passage of their vessels, which should alleviate some near-term energy and commodity prices and tamp down inflationary pressures.
Investment implications
Sources: Invesco Strategy & Insights, Bloomberg L.P., International Energy Agency (IEA), Our World In Data, as of 6 April 2026
The near-term de-escalation is likely to lead stocks higher, with non-US markets set to outperform.
Bonds are also likely to rally driven by lower oil prices and resulting inflationary pressures. The USD could go lower as investors realize how durable this ceasefire is likely to be.
From an Asian market’s perspective, Asian tech and AI equities have been oversold since the start of the Middle East conflict.
In contrast, the US stock market and AI stocks have outperformed as investors shifted investor preferences toward perceived safe‑haven and defense‑linked technology exposures. I expect that trend to reverse in the coming weeks as long as this ceasefire holds.
Looking beyond the shorter-term, the Middle-east conflict is likely to have structural developments in Asia, such as a faster transition to alternatives and renewable energies.
Investment risks
The value of investments and any income will fluctuate (this may partly be the result of exchange rate fluctuations) and investors may not get back the full amount invested.
