The Ceasefire trade is on, but clouds remain – North American Session Market Wrap for April 8

The US-Iran ceasefire is officially on the table, and Market bulls have returned with fierce conviction, but despite all the progress from the past 24 hours, the path is going to be quite rocky.

Wall Street exploded in a massive relief rally since yesterday’s late session, completely reversing the recent geopolitical panic that had gripped risk assets.

Global equities aggressively erased close to 50% of their war-induced drawdowns in a single session, with the Nasdaq surging about 2.70% to lead the charge.

This sudden de-escalation also triggered the abrupt unwinding of the dominant petrodollar trade. As Crude Oil tumbled , the US Dollar was hammered across the board, especially more pressured by its recent double top as the safe-haven and inflation-hedge premiums evaporated simultaneously.

And when the Dollar tumbles, animal spirits come out – Virtually all global assets close in the green today.

Energy markets however took the most violent hit, with WTI crude initially plummeting 20% toward the $92 handle.

However, the commodity is already creeping higher as traders scour the headlines for clarity on the actual terms of this temporary two-week truce (which is for now still quite foggy).

The ink on this fragile ceasefire is barely dry, and severe cracks are already showing.

Despite persistent optimism from the US President, the Iranian side has maintained a sour tone as some of their demands apparently have been violated (demands which haven’t been made available to the public).

Adding a massive layer of uncertainty to the newly minted bullish sentiment, Iran is expressing their mistrusts due to an intruding drone in Iranian airspace and disputes over nuclear enrichment rights. He warned that negotiating under these conditions is inherently unreasonable.

While the broader market is currently riding the high of a fading war premium, this immediate diplomatic friction suggests the ceasefire is resting on incredibly thin ice, so traders will have to remain cautious for times ahead!