U.S. stocks are close to recouping their losses from the Iran war, while oil remains elevated due to continued risk in the Strait of Hormuz.

Gate News message: On April 10, the U.S. stock market is nearing a full recovery from the decline triggered by the Iran war, with investors increasingly betting that the geopolitical shock will be temporary, but the crude oil market remains cautious. The two-week ceasefire agreement announced late Tuesday spurred a rebound in stocks, triggering a de-risking rally that helped the major indexes recoup more than two-thirds of their losses since the conflict erupted in late February. The S&P 500 Index (the U.S. market benchmark) is currently less than 1% below pre-war levels of 6878.88 points.

Meanwhile, crude oil prices remain elevated due to ongoing concerns stemming from Middle East supply bottlenecks. In a report to clients, Barclays strategists said that expectations in the stock market for “a good outcome” are clearly higher than in the oil market. They noted that the index’s performance has already been notably better than the pullback in oil futures, and pointed out that part of this rebound was driven by strong short-covering—short positions were forced to close as prices rose. Barclays also said investors’ confidence is growing that President Trump is pursuing an exit path to avoid greater economic losses, adding that “in our view, further de-escalation is the most reasonable outcome, because Trump needs an exit plan to manage rising political and economic costs.”

Citigroup strategists also expressed a similar view, saying that Tuesday’s ceasefire changed market sentiment. “Despite still many uncertainties, the fact that the U.S. and Iran found an exit path is itself a positive signal. Obviously, the route to an agreement won’t be a straight line. Investors have significantly reduced their risk exposure. If the ceasefire holds basically in place, they may be drawn back to add positions again, which means there could still be room for the rebound to continue.”

By contrast, the oil market is pricing a more cautious scenario, because tensions around the Strait of Hormuz remain, and key shipping lanes are still largely closed. WTI crude for May delivery (U.S. West Texas Intermediate crude futures) on Friday was nearing $100 per barrel, compared with about $67 before the outbreak of war.