Global markets see a "revenge rebound," even though "missiles are still flying and the strait has not reopened."

The missiles are still flying, the strait has not reopened, but the market has already decided to celebrate first. However, amidst the cheers, some have quietly begun to reduce their positions. On April 8, Eastern Time, the news of the U.S.-Iran ceasefire agreement was announced, prompting dramatic reactions in global financial markets. The Dow jumped 2.8% in a single day, about 1,325 points, marking the largest single-day gain in over a year. The S&P 500 rose 2.5%, and the Nasdaq rose 2.8%. Major stock indexes across Europe and Asia all saw gains of over 2%. Meanwhile, the U.S. benchmark oil price plunged 16% in one day to $94.41 per barrel, the largest single-day drop since the Covid pandemic, and the biggest since the 1991 Gulf War. Nevertheless, this rally has been accompanied by unease from the start. The ceasefire agreement lasts only two weeks, tanker traffic in the Strait of Hormuz remains sluggish, and multiple reports emerged during the trading day regarding ceasefire breaches—Netanyahu claimed "this is not the end of the war," while Iranian officials said the agreement was violated. As a result, market indices retreated noticeably from midday highs, and closing gains shrank significantly compared to opening futures. Osaic chief market strategist Phil Blancato said, "The market has a long-suppressed demand for even the slightest bit of good news." Yet, several market participants warn that whether the ceasefire will last and whether the strait will truly reopen remains the biggest unknown. ## Rebound Logic: Short Covering + Emotional Release The driving force behind this round of rebound is less about fundamental improvement, and more about mechanical correction of position structures. According to Goldman Sachs trading desk data, overall activity was 70% higher than the two-week average, but the intensity of short covering was below market expectations. Rich Privorotsky, head of Goldman’s Delta-One business, pointed out that previously, the market held high gross positions and low net positions overall, investors had too much index hedging, and a large number of futures shorts needed covering—this was the main fuel for the rebound. CTA strategies triggered mechanical buying in parallel, while compressed volatility provided tailwinds. SpotGamma data showed a concentration of approximately $1 billion positive Gamma near the S&P 500’s 6,800 level (at the 85th percentile historically); this structure drove the index upward quickly but also posed resistance to further gains. Goldman’s trading desk observed that long-only funds (LO) were the main buyers this round, with net buying ranked at the 87th historical percentile, mainly focused on tech and macro products; hedge funds (HF) were more balanced, and even reduced positions in sectors like tech and energy. ## Market Divergence: Tech Leads, Energy Plunges At the sector level, this rebound showcased a pronounced "wartime logic reversal". Economically sensitive sectors surged broadly: industrials, discretionary consumer, and homebuilders all rose significantly. Flash memory maker Sandisk Corp. jumped 9.9%, United Airlines rose 7.9%, and the Dow Jones Transportation Average hit a record high. Goldman’s TMT momentum portfolio (GSTMTMOM) rose 10% in a single day, marking its largest ever gain, closing at a historical high. The energy sector suffered a reverse hit. Companies including ExxonMobil, Apache, Cheniere saw share declines; U.S. fertilizer producer CF Industries fell 5.7%. According to Goldman, the semiconductor-over-software relative strength portfolio (GSPUSOSE) fell 8.5% intraday, also a record. In the bond market, the initial ceasefire news triggered a sharp global yield drop, and the pricing of central bank rate hikes shrank notably. However, selling pressure appeared in the U.S. daytime trading session; 30-year Treasuries ended with yields up, the 10-year Treasury auction underperformed expectations, and foreign demand decreased. ## Goldman’s Internal Debate: Rebound Likely, But Not Worth Chasing Regarding the same market movement, starkly different opinions emerged within Goldman Sachs. Dominic Wilson, Goldman’s chief cross-asset strategist, noted in a prior report that history shows a market rebound does not require waiting for the crisis to be fully resolved, only for confirmation that downside risk has reached its limit. He cited cases from the pandemic and the tariff shock: in both times, the stock market bottomed before economic pressures peaked. Wilson also pointed out that at a P/E of 25, even if an entire year of S&P 500 earnings was wiped out, the market would only drop 4%—"unclear resolution paths" can likewise trigger rebounds. Rich Privorotsky, head of Goldman’s Delta-One business, took the opposite view. He said bluntly, "Chasing the rally at these levels is not a good trade." He believes this round of gains is more of a technical short-covering rebound than a fundamental improvement. The S&P 500 has recovered about two-thirds of prior losses, and European stock gains are even more excessive—he estimates a "reasonable" gain should be 2–3%, not the actual 5%. Privorotsky’s tactic: sell off some long positions during this surge, rather than increase them. ## The Real Arbiter: Tanker Traffic in the Strait of Hormuz The crucial question regarding the ceasefire is whether the Strait of Hormuz will truly reopen. Iranian Foreign Minister Abbas Araghchi stated on social media: "Within two weeks, with coordination from Iranian armed forces and considering technical limitations, safe passage through the Strait of Hormuz will be possible." Privorotsky’s interpretation: tankers must go through Iran’s "toll station" for approval, and "technical limitations" means capacity will be actively managed—"Supply will be enough to prevent escalation, but not enough to lose Iran’s leverage at the negotiating table." He predicts international crude will stay around the $90 range, not fall back to $80. According to the Wall Street Journal, tanker tracking agencies show Persian Gulf shipping remains well below pre-war levels. Neil Roberts, Lloyd’s Market Association’s head of marine & aviation, said, "The odds of tanker volume simply returning to normal are very low." Clearview Energy Partners wrote in a client report, oil prices "failed to fall further after ceasefire news because fundamentals are sticky, and the ceasefire itself is full of uncertainty." ## Technical Warnings: Historic "Exhaustion Gaps" Noteworthy signals are emerging on the technical front. Analyst @alpha_pls noted on the X platform that the S&P 500 triggered an unusual technical event that day—a simultaneous gap breakout over its 50-day and 200-day moving averages. Since 1950, this signal has appeared only four times, each followed by a significant correction: over the next three months, the average maximum pullback was 9.51%, with the largest at 12.92% in 2018. The analysis indicates this pattern has always been an "exhaustion gap" rather than the start of a sustainable rally. Meanwhile, although the Cboe Volatility Index (VIX) dropped sharply that day, it is still above 20 and clearly higher than pre-war levels. Ben Emons, chief investment officer at Fed Watch Advisors, stated, "This is a fragile situation, and should not be ignored. Market pricing shows continued hedging demand, or rather, markets are still waiting for clearer developments." Mark Hackett, chief market strategist at Nationwide, simply said, "This isn’t something solved with a wave of a magic wand." ## Bigger Picture: Economic Pressure Has Not Disappeared Even if the ceasefire agreement holds, accumulated economic pressure will not simply dissipate. Oil prices remain about 60% higher than at the start of the year, continuing to burden the U.S. economy already facing persistent inflation. According to CME FedWatch, as of April 8, the probability of the Fed not cutting rates throughout 2026 rose to 73%, compared to only 4% before the conflict. Goldman’s chief cross-asset strategist Wilson pointed out that the current market has significantly over-priced monetary tightening. History shows that after oil supply shocks, policy rates rise slightly within 1–3 months, but fall again in 6–9 months as growth concerns intensify. He believes that this round of inflation fears might prove to be exaggerated in the face of slower growth and rising unemployment. Bloomberg strategist Michael Ball summarized: "This is a transition phase where markets move from escalation fears to patiently awaiting negotiations. Capital flows dominate all, fundamentals retreat, policy support is limited. This combination points to a broad trading range, lower than before the Iran conflict." Risk Warning and Disclaimer The market has risks, and investment requires caution. This article does not constitute personal investment advice nor considers the specific investment goals, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article suit their particular circumstances. Acting on this is at your own risk.