Wall Street Fear Index Recovers to Pre-War Levels
US President Trump announced on the 8th (local time) that he has decided to halt bombing and attacks against Iran for two weeks. He added that Iran had presented a 10-point proposal, which he evaluated as a viable basis for negotiations. Iran's Foreign Minister stated that, on the condition that all attacks cease, the Strait of Hormuz would be opened for two weeks, adding that consultation with the Iranian military would be necessary for vessel passage.
News of the two-week ceasefire agreement between the US and Iran led to a sharp drop in international oil prices, and the Volatility Index (VIX), which indicates market anxiety, fell back to pre-war levels. On the 8th (local time), West Texas Intermediate (WTI) crude oil fell over 17% to $93.42 per barrel, and Brent crude for June delivery, the international benchmark, traded down over 16% at $91.65. The sharp decline in oil prices eased inflation concerns, with yields on US 2-year Treasury notes falling 7 basis points to 3.751%, and 10-year notes down 8 basis points to 4.265%. The VIX dropped to 20.28, and Bitcoin rose 3.3% to $71,587.
In the stock market, sectors that had been declining due to soaring oil prices and inflation concerns turned upward. As of 10:20 AM Eastern Time, the Dow Jones Industrial Average rose 1,389 points (2.9%), the S&P 500 gained 2.56%, and the Nasdaq Composite advanced 2.9%. Conversely, energy-related stocks, which had benefited since the conflict began, showed the opposite trend.
Market experts identified Strait of Hormuz traffic as a key variable for assessing the sustainability of this rebound. Chris Senyek, an analyst at Wolf Research, diagnosed, "Market price fluctuations are likely to be dictated by news regarding vessel traffic in and out of the Strait of Hormuz and signs of renewed tension," while positively evaluating that "it is becoming clear that President Trump wants a resolution." Jay Woods, chief market strategist at Freedom Capital Markets, commented, "The market has become much better at predicting President Trump's next moves. Now the key is whether this familiar 'two-week' period leads to an actual resolution."