Finance
Trading Day: Giving Peace a Chance
Published by Global Banking & Finance Review®
Posted on March 25, 2026
4 min readLast updated: March 25, 2026
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Stocks advanced as hopes for a U.S.–Iran peace deal lifted equities, while oil, bond yields fell. Import prices jumped at the fastest pace in four years, and foreign central banks notably trimmed U.S. Treasury holdings.
How Markets Reacted to Middle East Tensions and Hopes for Peace
Market Movements and Investor Sentiment Amid Geopolitical Events
ORLANDO, Florida, March 25 (Reuters) - Stocks rose and oil prices and bond yields dropped on Wednesday, on hopes that the U.S. and Iran are progressing toward a peace deal. Investors' optimism was reflected in the MSCI All Country equity index clocking its biggest rise in six weeks.
In my column today I look at the recent surge in bets on higher interest rates in light of the Middle East energy shock. Essentially, markets have overshot - the move may be logical, but its magnitude is questionable.
If you have more time to read, here are a few articles I recommend to help you make sense of what happened in markets today.
Recommended Reading
- Iran still reviewing U.S. proposal despite negative initial response, senior Iranian official says
- Western powers were unable to secure shipping in the Red Sea. Hormuz will be harder
- U.S. import prices post largest gain in nearly four years in February
- Iran war rattles Gulf petrodollar foundations: Mike Dolan
- How private credit can survive its stress test
Key Market Moves
Stocks
- A sea of green. Asia, Europe, Americas all higher - standouts being Japan +3%, Euro Stoxx and FTSE 100 +1.4%, Mexico +3.6%. Wall Street's big three indices up 0.5-0.8%. MSCI World up ~1%, best day since February 9.
Sectors/Shares
- Nine of the 11 sectors in the S&P 500 rise; materials +2%, consumer discretionaries and healthcare +1%. Energy -0.5%. Amazon and Nvidia +2%, tech firms Intel, AMD, Super Micro Computers and Hewlett Packard all up 7-8%.
FX
- Dollar up broadly. USD/JPY back up near 160.00, AUD is biggest G10 decliner.
Bonds
- U.S. bonds rally, curve bull flattens. 2s/10s curve below 44 bps, lowest close since August. Like yesterday's 2-year sale, today's 5-year auction is very weak.
Commodities/Metals
- Oil -2%, gold +2%. Comex copper +1.5%.
Today's Talking Points
News of Great Import
Figures on Wednesday showed that U.S. import prices in February rose at their fastest rate in four years, up 1.3% after an upwardly revised 0.6% gain in January. The price of imported capital goods rose the most since 1988.
Rising energy costs in anticipation of conflict in the Middle East were blamed. But remember, oil rose around 15% in January and February - it is up 35% so far this month. Consumers and businesses should brace for even stronger price rises in the coming months.
Premium Service
The valuation premium that U.S. tech has long enjoyed over the broader stock market has almost evaporated. Measured by comparable forward 12-month price/earnings ratios, it is now the smallest in seven years.
The Roundhill "Mag 7" ETF is down 10% this year, three times as much as the S&P 500. Has the correction run its course? JPMorgan reckons the AI story is still losing some momentum, Barclays says the tech growth engine shows few signs of stopping. You pays your money, you takes your choice.
RoW Finally Selling Treasuries?
Foreign central banks' holdings of U.S. Treasuries held in custody at the New York Fed are the lowest since 2012, and poised to fall below $3 trillion for the first time since 2010. The value of these holdings has tumbled $75 billion in the last four weeks.
According to Deutsche Bank, that includes outright selling worth around $60 billion, the most since 2020. Foreign central banks were modest sellers of Treasuries last year, but that was offset by $440 billion of private sector purchases. If official selling is accelerating, will the private sector fill the gap?
What Could Move Markets Tomorrow?
Potential Market Movers
- Developments in the Middle East
- Energy market moves
- Japan services PPI inflation (February)
- Germany GfK consumer sentiment (April)
- European Central Bank policymakers Luis de Guindos, Pedro Machado and Patrick Montagner speak
- Bank of England policymakers Alan Taylor and Megan Greene speak
- Norway interest rate decision
- South Africa interest rate decision
- Mexico interest rate decision
- Bank of Canada Senior Deputy Governor Carolyn Rogers speaks
- U.S. weekly jobless claims
- U.S. Treasury sells $44 billion of 7-year notes at auction
- U.S. Federal Reserve officials scheduled to speak include Governors Lisa Cook, Stephen Miran, Philip Jefferson and Michael Barr, and Dallas Fed President Lorie Logan
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Disclaimer
Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
(Reporting by Jamie McGeever; Editing by Nia Williams)
Key Takeaways
- •Equity optimism fueled by geopolitical de‑escalation boosted MSCI indices and Wall Street, while oil dropped and bond yields declined.
- •U.S. import prices in February rose 1.3%, the largest monthly gain since early 2022, signaling renewed inflation pressures.
- •Foreign central bank Treasury holdings are slipping—gold reserves now exceed Treasuries for the first time since the 1990s, highlighting a broad shift in reserve strategies.
Frequently Asked Questions about Trading Day: Giving peace a chance
1What caused the recent surge in stock markets?
Markets surged on optimism for progress in U.S.-Iran peace talks, leading to higher equity indices globally and a positive sector performance.
2How did oil prices and bond yields react?
Oil prices dropped by 2% and bond yields fell as investors grew hopeful about easing Middle East tensions and potential energy stability.
3What does the latest U.S. import price data indicate?
U.S. import prices posted their fastest rise in four years, driven by higher energy costs and capital goods prices.
4Why are U.S. Treasuries under pressure?
Foreign central banks have been selling Treasuries, with holdings at the Fed at their lowest since 2012, prompting concerns about sustained demand.
5Are tech stocks still leading market growth?
The valuation premium for U.S. tech versus the broader market has nearly vanished this year, with mixed forecasts about future tech growth.
