For it to reach a new record high, it would need to rise by an additional 5% from current levels around 24,144. Having said that, while the index remains above its November-to-early March lows at 22,943-to-22,928, it will be deemed to have turned a corner and be seen as medium-term bullish.
A rise above the July-to-October 2025 peaks at 24,639-to-24,771 would probably lead to a new record high being made as well.
What comes next for markets
In the near term, the strongest rebounds are likely to come from assets that suffered the most during the sell-off.
Sectors such as technology and materials – both highly sensitive to growth expectations and interest rates – may outperform as risk appetite returns.
Conversely, energy markets could give back some gains as the immediate geopolitical premium fades, although prices are likely to remain elevated.
That said, several constraints will limit how far the recovery can extend. The ceasefire is temporary, negotiations remain uncertain, and physical supply disruptions will take time to unwind.
Even if the Strait of Hormuz fully reopens, shipping backlogs and logistical bottlenecks mean normalisation could take weeks or months. In addition, damage to key infrastructure – such as LNG export capacity – will weigh on supply for years, keeping a floor under energy prices.
Central banks face continued challenges
For central banks, the ceasefire offers some short-term relief but does not resolve the underlying tension between inflation and growth.
Elevated energy prices continue to pose upside risks to inflation, while the economic impact of the conflict – particularly in energy-importing regions – could weigh on growth.
Expectations for aggressive rate hikes may ease slightly, but policymakers are likely to remain cautious with the US Federal Reserve (Fed) not expected to cut rates until 2027. The Bank of England and other central banks must balance multiple considerations as oil-driven inflation complicates monetary policy even with a ceasefire since energy costs have already fed into broader prices and affect growth trajectories with lost output and disrupted trade creating headwinds.
Market outlook remains cautious
Ultimately, markets are entering a phase of tentative recovery rather than a full reset – for now at least. The next fourteen days will be critical: if negotiations progress, the relief rally could extend further; if tensions re-escalate, recent gains may quickly reverse.
For now, investors are likely to remain cautious, treating the current rebound as a reprieve rather than a resolution.
How to navigate market recovery
Investors and traders managing positions during tentative recovery have several options. Here’s how to approach current environment:
Research ceasefire terms, negotiation prospects and market dynamics thoroughly. Understanding geopolitical situation helps inform decisions. Trading for beginners provides background.
Choose whether you want to trade recovery or maintain cautious positioning. Spread betting and CFD trading allow flexibility.
Open an account with broker offering diverse instruments across asset classes.
Review positions on your chosen trading platform. Consider whether to add exposure or maintain protection.
Implement strategy based on analysis and risk tolerance. Maintain stop-loss discipline given fragile ceasefire.
Remember ceasefires can collapse rapidly. Only increase positions sized appropriately for potential reversals, maintaining diversification and risk management given substantial remaining uncertainty during fragile peace negotiations.