Hello traders, welcome to Tuesday. The new trading day opens with strong risk-on sentiment, despite the confusion and uncertainty surrounding the geopolitical narrative. The big story is a supposed ceasefire between Iran and Israel—announced not through official diplomatic channels, but via a social media post by Donald Trump. The problem? No timeline was provided, no official confirmation followed, and there is growing speculation that this may have been just another off-the-cuff remark without concrete backing. As a result, markets are caught in a fog of ambiguity—but interestingly, they’re not showing signs of hesitation.
In fact, Monday’s market movements were strong and optimistic. Indices surged across the board, led by American markets. Traders who were positioned for further escalation likely missed their entry points, as the rebound happened quickly and with conviction. This bullish momentum is spilling over into Tuesday’s European session, with indices continuing to push higher.
Let’s turn briefly to the macroeconomic calendar. Monday was PMI day. While French PMIs disappointed, PMIs from Germany, the broader Eurozone, the UK, and the US came in largely in line with or slightly above expectations. That added fuel to the positive sentiment. Today, the calendar brings several important events. We are expecting inflation data from Canada, as well as key speeches from central bankers—Bank of England Governor Andrew Bailey and Fed Chair Jerome Powell. Those may steer the market narrative back toward interest rates and monetary policy, but for now, geopolitics remain the dominant theme.
Commodities are responding sharply to the changing risk landscape. Oil is in freefall. Brent has plunged 13% over the last three trading days, while WTI is down 10%. The oil market is now negative for the year again, and the dramatic reversal erases much of the war-premium pricing we saw recently. Gold is also heading lower, confirming that investors are backing away from safe havens. The scale of the drop suggests a significant repositioning away from fear and back toward risk appetite.
Currencies are aligning with this risk-on mood. The Swiss franc and US dollar are weakening, while risk-sensitive currencies—particularly emerging market currencies in Europe—are strengthening. This confirms that sentiment is broadly optimistic despite the lingering uncertainty over what is really happening in the Middle East.
So, while we don’t yet have clarity about the ceasefire status or whether Trump's post reflects reality or rhetoric, markets are clearly voting with their capital. They are embracing the upside and moving away from defensive positioning. Let's see whether this optimism holds through today’s economic releases and central bank commentary—or if volatility returns once the fog of geopolitics thickens again.