After 40 days of intense tensions in the Middle East, the major indices of the Old Continent rebounded sharply yesterday, welcoming the promise of a de-escalation in the region following the ceasefire proclaimed by Washington, which eased concerns regarding the conflict's impact on global growth.

The CAC thus rallied 4.5% to 8,263.87 points, returning to its highest level since the start of the conflict in late February, while Frankfurt gained 4.7% and the FTSE 100 in London recovered 2.4%.

However, yesterday's relief is expected to be quickly swept away this Thursday by a spike in nervousness and renewed uncertainty regarding the sustainability of this fragile lull.

Through the Speaker of its Parliament, Mohammad Bagher Ghalibaf, Iran accused the United States last night of violating the ceasefire less than 24 hours after it came into effect.

According to Tehran, these violations include continued Israeli attacks against Lebanon, a drone intrusion into Iranian airspace, and the refusal to recognize the country's right to enrich uranium.

Optimism deemed premature by analysts

As a result, the fear of a prolonged war is once again dominating trade, bringing back questions regarding its effects on economic growth, inflation driven by rising commodity prices, and the trajectory of central bank monetary policies amid the increasingly real threat of potential stagflation.

For the teams at Saxo, the market recovery anticipates a scenario that could prove overly favorable.

"Not that the rise is illegitimate (it reflects the disappearance of a tail risk), but its magnitude assumes a high probability of a lasting resolution that the facts do not yet validate," says Dorian Anglada, an analyst at the Danish bank.

At Jefferies, analysts believe that while the peak of uncertainty has indeed passed, the trend remains highly vulnerable to the slightest geopolitical development.

"With negotiations remaining fragile and regional tensions far from resolved, markets appear to be transitioning from a scenario based on an energy shock to a regime marked by greater volatility, as crude prices have not returned to pre-war levels even if their upside potential now appears more limited," the U.S. broker commented.

Oil prices rise again, equity buying momentum fades

The market is being weighed down, among other factors, by the recovery in oil prices, which are regaining ground this morning after yesterday's slump.

Brent crude is currently gaining 2.4% to over 97 dollars, while West Texas Intermediate (WTI) is up 3.4% at 97.6 dollars.

U.S. index futures are trending down by approximately 0.2% following the rebound in New York, which was supported by hopes for peace in the Middle East.

The Dow Jones, S&P 500, and Nasdaq Composite had gained between 2.5% and 2.9% on Wednesday evening.

In Asia, the buying momentum observed yesterday faded overnight.

On the Tokyo Stock Exchange, the Nikkei lost 0.5% late in the session, weighed down by the decline in Wall Street futures. The CSI 300 index of large-cap stocks fell by approximately 0.6%.

U.S. inflation in focus

A certain "wait-and-see" attitude is also prevalent ahead of several major events scheduled for this week, starting with the latest PCE inflation figures in the United States, to be published this afternoon.

While this report is of limited interest as it describes the situation prior to the Gulf War, the same will not be true tomorrow with the release of the Consumer Price Index (CPI) for March. Given that gasoline prices rose by 27% compared to February, the inflation rate is expected to have jumped well beyond 3% last month across the Atlantic.

The market will also closely monitor tomorrow's University of Michigan consumer sentiment index, which is expected to reflect the consequences of the war against Iran on household morale via rising oil prices.

Uncertainties regarding the situation in the Middle East appear to be strengthening the appeal of the bond market, favoring a decline in U.S. yields: the ten-year Treasury yield is down 5 basis points to around 4.29%.

In Europe, the ten-year German Bund yield is retreating by 13 points to around 2.95%.

On the foreign exchange market, the dollar is regaining some of its safe-haven status in this climate of high uncertainty. The euro, which had managed to erase its March losses since the beginning of April, has fallen back below 1.1660 this morning.