Markets have shifted into a clear risk-on phase following confirmation of a 14-day ceasefire involving the United States, Israel and Iran. This development has eased immediate geopolitical tensions and improved overall market sentiment. The partial reopening of the Strait of Hormuz has also reduced near-term supply concerns, contributing to softer Oil prices and supporting broader risk appetite.
Fundamental Overview
Despite the positive shift in sentiment, the broader macro backdrop remains mixed. Recent economic data continues to highlight resilience within the US economy, while Europe shows comparatively weaker performance, reinforcing an uneven global growth outlook. Inflation pressures remain present but relatively stable, suggesting central banks are likely to maintain a cautious, data-dependent stance.
Markets are also continuing to digest a range of ongoing macro themes, including trade policy developments, tariff uncertainty, Federal Reserve rate expectations, fiscal policy dynamics and positioning within the AI-driven equity cycle. As a result, the current rally appears to be driven more by short-term relief than a confirmed structural shift in trend.
Risk Sentiment
Risk sentiment is firmly risk-on in the near term, supported by easing geopolitical tensions and improving confidence across asset classes. However, this optimism remains conditional. Market participants are aware that any deterioration in the geopolitical backdrop or macro data could quickly reverse recent gains. The overall tone reflects positive momentum, but with underlying caution still present.
Technical Overview
Technically, markets are showing bullish momentum, with major indices breaking higher from recent consolidation zones. The US dollar is beginning to weaken in line with improved risk appetite, while Oil is experiencing short-term downside pressure due to reduced supply disruption risk. Gold remains supported, maintaining a constructive bias above the 4,840 level.
Focus
While momentum favours the upside, traders should remain alert to potential pullbacks, with key levels likely to determine whether this rally can sustain.