Caution remains the watchword in the absence of signs of hope for a diplomatic solution to the armed conflict in Iran, and as the threat of slowed growth coupled with accelerating inflation due to soaring commodity prices becomes increasingly real.

In a sign of market nervousness, indices turned lower yesterday in Europe (-0.2% in Paris, -1% in London, and -1.6% in Frankfurt), erasing part of the gains recorded during Tuesday's vigorous rebound.

U.S. markets ended Wednesday's session on a mixed note, still under the influence of geopolitical tensions. In this context, the Dow Jones shed 0.6% and the S&P 500 nearly 0.1%, while the Nasdaq 100 finished almost flat.

Now firmly established above 24, the VIX - often referred to as Wall Street's "fear index" - remains well above the 20-point threshold considered synonymous with a high-stress environment.

Markets under high tension

The volatility observed in the oil market in recent days reflects uncertainty regarding the duration of the war and the possibility of an energy crisis that could have a lasting and significant impact on the markets.

Indeed, nothing seems able to stop the rise in oil prices for now, not even yesterday's decision by the International Energy Agency (IEA) to release 400 million barrels of oil from its emergency reserves to address disruptions resulting from the war in the Middle East.

"Honestly, all of this looks more like a simple band-aid on a wooden leg than anything else," tempers Michael Brown, strategist at Pepperstone.

"We are replacing a flow of goods with a stock, so it doesn't solve the root of the problem," he explains.

These concerns more than overshadow the rather encouraging comments made yesterday by Donald Trump regarding the possibility of a near end to the conflict. The U.S. President reaffirmed yesterday that the war would end "soon" and that there was "hardly anything left to target" in Iran.

"Then again, that's classic Trump; we're starting to know the tune by now," adds Michael Brown.

"At this stage, the market is starting to tire of fine words: investors are now waiting for concrete actions rather than promises of de-escalation," the analyst concludes.

As a result, Brent is currently up more than 6% at 97.6 dollars a barrel after once again crossing the 100-dollar threshold overnight. U.S. light crude (West Texas Intermediate, WTI) is up 5.7% at 92.2 dollars.

While Oman had to evacuate all vessels from its main oil terminal as a precautionary measure, some observers fear that these yo-yo movements are not over.

Unprecedented chaos for black gold

"Weekly oil volatility has just reached its all-time high on a weekly timeframe, something never seen since data collection began in the early 1980s," notes Ahmad Assiri, also an analyst at Pepperstone.

"We are witnessing massive and brutal swings: a 20% surge, followed by another 20% increase, then fierce selling pressure of nearly 20%, only to see prices return to the 100-dollar-a-barrel threshold in record time," the professional observes.

"This testifies to a state of absolute uncertainty: we are facing a market purely dictated by the urgency of headlines," he believes.

"With a barrel of Brent back above the psychological 100-dollar mark today, it becomes extremely difficult to convince traders to abandon their risk premium. Instead, they are now pricing in the reality of a complex, degraded, and lasting geopolitical situation," concludes the Pepperstone analyst.

On the currency market, the geopolitical context is primarily benefiting the yen and the dollar, resulting in a retreat of the euro against other major currencies.

At around 1.1550, which is almost the low of the year, the euro continues to lose ground against the greenback, a sign that forex traders expect a prolonged period of uncertainty for the Eurozone economy and ECB monetary policy.

With the unfavorable evolution of the geopolitical context and the rise in inflation expectations, U.S. Treasury yields are trending higher. The ten-year yield is established above 4.20%.

The European bond market is following suit, with the ten-year German Bund yield returning to its worst levels since late 2023 (2.93%), as are French OATs (3.57%).

While geopolitics should continue to dictate the trend, investors will nonetheless carefully study the U.S. jobless claims figures at 2:30 PM, as well as the latest data relating to the U.S. real estate market.