The week was dominated by hopes of a peace agreement between Iran and the United States, even though the Strait of Hormuz remains closed. This prospect has supported equity markets, still driven by strong risk appetite and the persistent enthusiasm surrounding technology stocks. Oil is also attempting to stabilize, encouraged by the possibility of de-escalation, although it is far too early to declare victory. In the bond market, the U.S. 10-year yield hit resistance at 4.70%, prompting a slight pullback, but a more meaningful easing would require a clear break below 4.44%, a key technical threshold. In this climate of anticipation, precious metals could benefit from a peace agreement, while the dollar would likely consolidate. As the final weekend of May approaches, investors are hoping that diplomatic signals will finally translate into concrete progress.
Investment Analysis and Opportunity
Markets appear increasingly unfazed by the contradictory signals coming out of Washington regarding the Middle East. The dominant assumption is now that a resolution to the conflict is within reach, even though nothing has been decided between the validation of a protocol extending the ceasefire by 60 days and the possibility of renewed military strikes. This geopolitical uncertainty, ongoing for three months, has not dampened risk appetite. U.S. indices continue to set new daily records, driven by the exceptional momentum of artificial-intelligence-related stocks, which continue to attract the bulk of investment flows. In this environment, cyclical assets benefit from the prevailing optimism, while bonds and safe-haven assets remain under pressure, reflecting a market convinced that de-escalation is the most likely scenario. However, this confidence could be tested if negotiations fail or if military tensions resurface.
Conclusion for Investors
For investors, the current situation highlights a paradox: markets are behaving as if peace were imminent, even though uncertainties remain significant. Risk appetite is intact, supported by technology and AI, but this dynamic rests on a fragile equilibrium. A confirmed peace protocol could reinforce the bullish trend, push yields lower and revive precious metals. Conversely, renewed tensions could quickly trigger volatility, weigh on equities and support both the dollar and bonds.
In this environment, the key for investors is to monitor diplomatic developments closely while remembering that markets can sometimes get ahead of themselves. Caution remains warranted, but opportunities persist in a context where technology continues to play a central role in driving global equity performance.