Forty days of American and Israeli strikes on Iran came to a conditional halt on the night of 7 April, when United States (US) President, Donald Trump, announced a two-week ceasefire less than two hours before his own deadline for Iran to reopen the Strait of Hormuz or face the destruction of its entire civilian infrastructure. Mediated by Pakistan’s Prime Minister, Shehbaz Sharif, and Army Chief General, Asim Munir, the announcement immediately sent oil into freefall and equity markets surging – but the ceasefire is already fraying, and the gulf between both parties on a permanent settlement remains substantial.
IRAN’S 10-POINT PLAN
Iran’s 10-point proposal, submitted via Islamabad, and described by Trump as a “workable basis on which to negotiate,” sets out Tehran’s terms in full. The plan demands:
- A US commitment to non-aggression against the Iranian state
- Iranian control over passage through the Strait of Hormuz, managed through a formal secure transit protocol coordinated by its armed forces
- An end to all attacks on Iran and its regional allies
- The lifting of all US primary and secondary sanctions
- The release of frozen Iranian assets
- Formal recognition of Iran’s right to enrich uranium
- Full reparations for all war damages
- Complete withdrawal of US forces from the Middle East
- A halt to combat on every front – explicitly including Israel’s campaign against Hezbollah in Lebanon
- A UN security council resolution making any deal binding
The White House has confirmed that a different, condensed version of the plan formed the actual basis of the agreement, with Trump stating that “there is only one group of meaningful points acceptable to the United States” that would be discussed in Islamabad, where talks are scheduled to begin today, 10 April, with a US delegation led by US Vice President, JD Vance.
CEASEFIRE VIOLATIONS
Within hours of the ceasefire taking effect, accusations of violations were traded in both directions. Iran’s Parliamentary Speaker, Mohammad Bagher Ghalibaf, declared that three points of the proposal had already been breached, pointing primarily to Israel’s continued strikes in Lebanon – a condition Iran’s President, Masoud Pezeshkian, described as “essential” for the agreement to hold. Iranian state media briefly reported the Strait of Hormuz was reclosed as a result.
From the other direction, Iran-aligned forces launched drone and missile attacks across multiple Gulf states on 8 April: Kuwait faced 28 drone strikes, the UAE 35, a fire was ignited at Abu Dhabi’s Habshan gas complex, and a Saudi pipeline was directly hit. Qatar intercepted seven drones. Iranian state television confirmed the attacks, framing them as retaliation for prior strikes on Iranian oil infrastructure.
Washington’s response was blunt – Lebanon was never part of the deal and the US position on uranium enrichment – no enrichment, under any circumstances – had not moved.
THE CASE FOR A DEAL
There is a genuine case for a deal from both sides. Trump is under genuine domestic pressure: US petrol prices have risen above $4/gallon, November’s midterm elections are approaching, and six weeks of military action have not delivered a decisive outcome. Tehran, for its part, has absorbed serious infrastructure damage and has every incentive to negotiate sanctions relief and asset unfreezes.
While both governments have publicly claimed the ceasefire as a victory – Iran’s Supreme National Security Council called it “an enduring defeat for Washington,” and Trump declared it “total and complete victory” – the mutual face-saving creates enough political room for both to sit at a table. In addition, Pakistan’s credibility as a neutral mediator and the forum being held in Islamabad give the talks a workable structure.
A MINEFIELD OF OBSTACLES
The structural obstacles are harder to dismiss. Uranium enrichment is the most intractable issue on the table. Trump stated on 8 April that Iran will not be permitted to enrich uranium and that the US will work with Iran to “remove all deeply buried nuclear dust.” Tehran’s publicly released plan demands the explicit opposite. In addition, a US withdrawal from regional bases, reparations payments, and formal Iranian sovereignty over the Strait are non-starters in Washington, regardless of who leads the delegation.
Lebanon is also a fault line: Iran calls it a precondition; Israel says it falls outside the deal entirely; and Washington appears unable or unwilling to constrain Israeli operations long enough to test Iran’s willingness to strike a deal. Iran has gone as far as saying it will not attend peace talks if Israel continues to strike Lebanon and the trust deficit runs deep; Iran’s Supreme National Security Council warned that “should the slightest error be committed by the enemy, it shall be met with full force.”
THE MARKET STAKES
For markets, the stakes are direct and measurable. On the ceasefire announcement, Brent crude fell 13.3% to $94.75/barrel – its sharpest single-day decline since the pandemic – while West Texas Intermediate dropped 16.4% to $94.41/barrel, posting its biggest one-day loss since April 2020.
The US’s Dow gained over 1,300 points, its best session in a year; the S&P 500 added 2.5% and the Nasdaq 2.8%. Japan’s Nikkei gained 5.4%, the South Korean KOSPI 6.9%, and Germany’s DAX surged 5.1%. The VIX volatility index fell 22%. But oil remains well above the $73/barrel pre-war Brent level, and as breach accusations emerged on 9 April, Brent rebounded 2.8% to $97.42/barrel.
GLOBAL ECONOMY HOLDS ITS BREATH
The oil backlog inside the Gulf is substantial: 187 tankers carrying 172 million barrels remain stranded. Qatar’s Ras Laffan LNG complex – responsible for roughly 20% of global liquefied natural gas production – is running at 17% below capacity following infrastructure damage. Total regional energy infrastructure rebuild costs are estimated by Rystad Energy at over $25 billion.
If Islamabad collapses and hostilities resume, oil will immediately be back above $110/barrel, global inflationary pressure will be reignited, central banks will face renewed pressure to hold rates higher for longer, and risk-off sentiment will push emerging market currencies – including the rand – sharply weaker.
THE CEASEFIRE THROUGH SOUTH AFRICA’S LENS
If a deal is reached, even a phased one, the prize is a gradual return toward pre-war oil price levels as the tanker backlog clears. An emerging market relief rally, lower South African fuel and import cost pressure, and the prospect of the South African Reserve Bank recovering meaningful policy flexibility will give South Africa a boost to remain on track for the meaningful structural reform that started last year.
The next two weeks will determine which path the global market takes. We will be watching every headline closely.
A LOOK AT THE MARKETS
THE WEEK’S KEY THEMES:
- Ceasefire doubts keep bonds on edge
- Wall Street extends its truce-driven rally but futures paint a sceptical picture
- Brent crude sheds over 13% following the US-Iran ceasefire
- US Dollar Index on track for a 1% weekly loss
BONDS
The US 10-year government bond yield held at 4.29%, broadly reflecting a calmer week for interest rate markets. The US-Iran ceasefire drove oil prices lower, which in turn eased fears about inflation remaining high – reducing pressure on the US Federal Reserve to raise rates further. That said, nervousness lingers. Israeli strikes on Lebanon and restricted shipping through the Strait of Hormuz are keeping investors cautious. Today’s March US inflation report will offer the first clear read on how the conflict has affected prices, and the Fed’s March meeting minutes confirmed that policymakers still see the war as a potential inflation threat. One rate cut is, however, still expected this year.
Germany’s 10-year bund yield recovered to 2.98% on Thursday after falling sharply the day before, as doubts about the ceasefire’s durability pushed energy prices back up. Israel’s deadliest strikes on Lebanon yet, Iran’s refusal to resume peace talks if Israel continues to strike Lebanon, and the continued Hormuz closure, all point to a conflict far from resolution. Markets have responded by pricing in at least two European Central Bank rate hikes before the end of 2026.
The UK 10-year gilt yield rose seven basis points to 4.72% on Thursday, reversing most of the sharp drop recorded the previous day. The catalyst was a rapid deterioration in ceasefire confidence. At least one Bank of England (BoE) rate hike is now expected before the end of 2026.
South Africa’s 10-year bond yield edged back up to around 8.54% after hitting one-month lows on 8 April, as investor confidence in the ceasefire weakened and appetite for emerging market assets faded. South Africa is particularly exposed to rising oil prices given its dependence on energy imports – higher crude costs feed quickly into local fuel and food prices, with fertiliser import costs adding further agricultural risk. The Reserve Bank held rates steady in March but has kept the door open to hikes if inflation pressures build.
EQUITIES
Heading into the weekend, futures were in modest negative territory – a reflection of how much uncertainty remains around the ceasefire’s durability rather than any shift in the underlying trend. Israeli Prime Minister, Benjamin Netanyahu, drew a firm line between Lebanon and the Iran truce, while Trump issued fresh warnings to Tehran on Hormuz shipping fees. Thursday told a more constructive story: gains of 0.58%, 0.62%, and 0.83% for the Dow, S&P 500, and Nasdaq respectively extended a truce-driven rally, and all three benchmarks are positioned for back-to-back weekly gains.
In Europe, a strong Wednesday was followed by a retreat on Thursday, with the STOXX 50 giving up 0.6% to 5,878 and the STOXX 600 shedding 0.4% to 611. Iran’s assertion that Washington had breached the ceasefire terms put de-escalation hopes back in doubt and reignited energy price concerns. The knock-on effect was broad: higher yields hit bank stocks hard – Santander, BBVA, and Nordea each fell 1.5% – while the rebound in natural gas prices weighed on industrial stocks, Airbus and Siemens, both down more than 2%. Energy producers moved in the opposite direction, with Eni and TotalEnergies each advancing over 3%.
Having surged 2.5% the day before, the United Kingdom’s FTSE 100 gave back a fraction on Thursday, settling at 10,604 as the market took stock of a ceasefire arrangement that looks increasingly precarious. Iran’s framing of Israeli strikes on Hezbollah as a violation of the agreement – and its threat to abandon talks altogether – alongside persistent Hormuz constraints, were enough to dampen enthusiasm. Higher crude prices lifted energy giants, BP and Shell, by 3.2% and 1.4% respectively, and defensive stocks including water utility companies, United Utilities and Severn Trent, and renewable energy company, SSE, attracted steady buying, each gaining between 1.9% and 2.3%.
Yesterday was another difficult session for South African equities, with the FTSE/JSE All Share Index closing down 1.10% at 118,205 points. The broader FTSE/JSE All Share has been under consistent selling pressure throughout the week – earlier sessions included a single-day drop exceeding 5% – and the cumulative weekly decline stands at roughly 3% to 4%, a sharp retreat from the highs reached in late February. The selling has been indiscriminate, reflecting a confluence of global risk-off positioning, commodity market instability, and the particular vulnerability of emerging markets during periods of geopolitical stress.
COMMODITIES
A recovery above $96/barrel for Brent has not been enough to alter the week’s dominant narrative – the US-Iran ceasefire sent prices sharply lower and a weekly decline of more than 10% is still on the cards. The rebound was driven by Israel’s continued Lebanon operations and a Hormuz waterway that shipowners are still treating with extreme caution pending clearer access guidance. Supply concerns deepened after Riyadh confirmed that attacks on its energy infrastructure have cut productive capacity by around 600,000 barrels per day, while a pipeline built to route oil around Hormuz sustained a direct hit.
Three consecutive weeks of gains look assured for gold, which is holding comfortably above $4,700/ounce today. The ceasefire’s deflationary effect on oil has been the primary support – lower energy prices ease inflation expectations and reduce pressure on central banks to tighten further, a combination that typically benefits the metal. A dollar that has softened through the week provided an additional tailwind. Weekend talks in Islamabad are the next focus, though with Netanyahu continuing to separate Lebanon from the Iran truce framework, and Trump keeping the pressure on Tehran, the geopolitical backdrop remains supportive for safe-haven positioning.
CURRENCIES
Despite steadying around 99, the US Dollar Index is tracking a weekly loss of more than 1% – a direct consequence of the ceasefire removing much of the inflation and rate-hike premium that had been supporting the currency. Attention is split between the weekend’s Islamabad diplomacy and today’s March Consumer Price Index release, which will offer the first hard evidence of how the conflict has translated into price data. Minutes from the US Federal Reserve’s March Federal Open Market Committee meeting flagged the war as a credible inflation risk, though the committee’s central expectation of one rate cut this year remains intact.
Sitting just below $1.17/€, the euro has been largely range-bound as investors try to gauge how long the ceasefire can hold. Israel’s most destructive Lebanon strikes to date, coupled with Iranian casualty warnings, retaliation threats, and potential refusal to re-enter talks with Washington, have kept the risk environment unsettled. The Hormuz blockade has not let up, and Trump has given no indication that US forces are going anywhere soon. The market’s conclusion has been straightforward – at least two European Central Bank rate hikes are now priced in before the end of 2026.
Sterling is holding just south of $1.34/£, caught between the initial relief of a ceasefire and the rapidly accumulating evidence that it may not survive the week. Iran’s casualty figures from Lebanon escalated sharply, provoking retaliation warnings and a threat to withdraw from peace negotiations, while the Hormuz standoff continues to push energy costs higher. Trump’s refusal to commit to a troop withdrawal timeline has done nothing to ease the tension. The Bank of England is now expected to deliver at least one additional rate increase before the close of 2026, with markets pricing that outcome with growing conviction.
After rallying more than 2% on 8 April in response to the ceasefire announcement – briefly touching one-month highs – the rand has since retreated as the risk mood soured again. Israel’s intensified campaign in Lebanon prompted Tehran to maintain the Hormuz closure and signal that it may walk away from negotiations altogether, sending oil prices sharply higher and reigniting inflation concerns. For South Africa, whose assets had found meaningful relief on ceasefire optimism, the reversal is a reminder of how exposed the currency remains to the trajectory of the conflict – much of the steep depreciation seen since the war began has only partially unwound.
*Please note that all information is at the time of writing.
Key indicators:
- USD/ZAR: 16.43
- EUR/ZAR: 19.20
- GBP/ZAR: 22.07
- BRENT CRUDE: $97.71
- GOLD: $4,753.09
Written by Citadel Advisory Partner and Citadel Global Managing Director, Bianca Botes.
Sources: Bloomberg, CME Group, IEA, Investing.com, Reuters, Trading Economics and TradingView.
