Investors appear to be regaining some appetite for risk assets after Tehran announced that "non-hostile" vessels could now transit the Strait of Hormuz. This reopening to navigation is reportedly part of a 15-point plan unveiled yesterday by Washington aimed at ending the conflict.

A fragile de-escalation

However, tensions in the region are far from subsiding, as Israel continued its massive bombardment of the Islamic Republic on Tuesday.

Meanwhile, Benjamin Netanyahu dampened hopes for a swift peace, explaining that it was up to Israel to decide when peace should return, and that it would not happen until the IDF had achieved "all its objectives."

Furthermore, rumors are circulating regarding the deployment of 3,000 U.S. troops to the region, reviving the hypothesis of a ground operation on Iranian soil, in addition to the official confirmation of 50,000 troops in the Gulf region, suggesting a large-scale operation could be on the horizon.

Yet investors are clinging to hopes of a diplomatic resolution, as evidenced by the vigorous 2.9% rebound of the Nikkei index on the Tokyo Stock Exchange this Wednesday. In Hong Kong, the Hang Seng posted more modest gains of around 0.5% late in the session, while the CSI 300, tracking mainland China's blue chips, climbed 1.2%.

Easing crude prices

The positive signal from Tehran, perceived as the first sign of de-escalation in a crisis lasting nearly a month, appears likely to soothe - at least temporarily - fears related to the global surge in energy prices.

In the oil market, prices, which had climbed on Monday to their highest levels since the summer of 2022, are facing profit-taking in anticipation of reduced tensions regarding the Iranian situation.

Brent crude fell 3.9% toward the 100 dollar per barrel mark, specifically to 100.4 dollars, while West Texas Intermediate (WTI) dropped 3.1% to below 89.5 dollars.

At this stage of the week, the oil market is heading toward its first negative weekly performance after five weeks of gains, as speculation over a possible success in ongoing talks outweighs the potential consequences of current disruptions.

Slight retreat in risk aversion

In a sign of returning calm to the markets, the Swiss franc and the yen, considered safe-haven assets, are trading lower, while risk appetite is supporting cryptocurrencies such as Bitcoin (+0.8%).

Hopes for an easing of tensions in the Middle East failed to benefit Wall Street yesterday, although U.S. markets ended the session with moderate losses. At the closing bell, the Dow Jones was down 0.2%, the S&P 500 around 0.4%, and the Nasdaq nearly 0.8%.

Based on futures orientation, the New York Stock Exchange is expected to rebound by 0.6% to 0.7% this afternoon.

Diverging views: between pessimism and buying opportunities

According to some analysts, European equity markets, which bore the brunt of the resurgence in geopolitical tensions and the energy shock, could be on the verge of a significant tactical rebound, according to HSBC strategists.

In a note published by Duncan Toms, strategist at HSBC, market sentiment has reached such extreme levels of pessimism that it now constitutes a "contrarian buy signal."

In his view, this overly gloomy positioning suggests that downside risk is already largely priced in, paving the way for a 7% to 8% advance in the event of de-escalation.

Others remain more circumspect.

At Dorval Asset Management, experts believe the situation in Europe may have reached a point of no return, which could prompt investors to continue favoring the U.S. market while waiting for further clarity.

"This crisis has already produced a major shift from the consensus at the start of the year: the resilience of Wall Street versus the vulnerability of Europe and Asia," notes François-Xavier Chauchat, economist and strategist at the firm.

"Europe and Asia - heavily dependent on fossil fuels - have indeed been highly exposed by this crisis," the specialist adds.

"In the case of Europe, this risk is accentuated by expectations of ECB rate hikes, which are unlikely to disappear completely," he warns.

Status quo for bonds and the euro

In the bond market, the announcement of a possible easing of tensions regarding Iran has not translated into a cooling of government bond yields. The 10-year Treasury yield rose by more than five basis points to 4.39%.

On the currency front, the euro is stabilizing against the dollar in response to the semblance of geopolitical easing. The single currency remains anchored at its 1.16 support level against the greenback.

While economic indicators are more than ever taking a backseat in the current context, market participants will nonetheless focus today on the latest inflation figures from the UK, the Ifo business climate index in Germany, and import prices expected this afternoon in the United States.