The US and Iran have reached a temporary ceasefire agreement, and the "panic index" has plummeted to pre-war levels.

As the United States and Iran reached a temporary ceasefire agreement at the last minute, the Cboe Volatility Index, known as the market "fear index", plunged by 22.15% (5.71 points) to 20.07 points, reaching its lowest level since the US attack on February 27. If the downward trend continues, this will be the largest single-day drop since Trump suspended the tariff plan a year ago (which caused global market turmoil). It is reported that the index is an indicator of measuring the expected volatility of the stock market in the next month. This turnaround was due to successful mediation by Pakistan, with the US and Iran agreeing to a two-week ceasefire and reopening the Strait of Hormuz. Delegations from both sides are scheduled to begin formal negotiations in Islamabad on April 10, with the aim of laying the foundation for long-term security in the region. With this significant positive boost, there has been a drastic reallocation in global asset allocation. With the expectation of nearly one-fifth of global oil transportation routes being restored, energy prices, which had surged due to supply interruption risks, experienced a "high dive", with WTI crude oil futures prices falling by over 16% in a single day, quickly dropping below $95 per barrel. The immediate drop in energy costs has eased inflation expectations, increasing the possibility of a rate cut by the Federal Reserve within 2026 from almost zero to over 40%. In the currency market, decreased safe-haven demand led to the US dollar index falling to a four-week low, while cryptocurrencies like Bitcoin rebounded, stabilizing above $72,000. The capital markets have shown a long-awaited overall uptrend. Dow futures surged by over a thousand points after the confirmation of the news, and the Asia-Pacific stock markets saw a general rise, with the Korean Composite Index leading with a 6% gain. Technology growth stocks performed notably well, with core assets like NVIDIA and Tesla recording significant gains in pre-market trading, reflecting investors reassessing valuation repair space after the elimination of geopolitical risks premiums. Traders at Citigroup Trading Desk, Vishal Vivek and Stuart Kaiser, stated in a report to clients that the ceasefire agreement could serve as a catalyst for "continued market gains". During the war, most investors remained on the sidelines, with many already hedging their positions before the conflict. Many speculated that Trump would eventually pull out of the conflict, which led to the stock market almost remaining unchanged on Tuesday, even after he claimed that if a deal couldn't be reached with Iran, "civilization will cease to exist". "Even before the escalation, investors had generally taken good hedging measures," Vivek and Kaiser explained. Despite the surge in oil prices and widespread disruption of global trade, hedging operations helped limit stock losses in March. Citigroup strategists stated that portfolio managers responded by reducing leverage, while hedge funds focusing on futures turned bearish on US stocks, indicating that investors have been in a "do not intervene" mode in recent weeks. Nevertheless, MarketWatch issued a warning that the current ceasefire agreement is still fragile, and it will take some time for the shipping capacity in the Strait of Hormuz to fully recover. After experiencing the initial fervent rebound, the market still needs to be cautious of the fluctuations and reversals in the subsequent negotiation process.