J.P. Morgan Strategist: Iran Volatility is Just Another ‘Notch on the Belt’ as Markets Rally at Fastest Pace Since COVID

(SeaPRwire) –   Financial markets are posting robust gains this week amid optimism that the conflict with Iran could be nearing a conclusion. Although peace negotiations have broken down, a tenuous ceasefire remains in place, and President Trump indicated overnight that discussions might restart this week.

Investors are eager for positive developments—so much so that some economists fear trading is being driven more by hopeful sentiment than by solid data. Asian indices advanced this morning, S&P futures are trading at optimistic levels, and European markets are mostly steady, possibly showing less willingness to act on White House assurances.

Prior to the New York open, the S&P 500 finished “just short of an all-time high,” Deutsche Bank’s Henry Allen informed clients. He noted this represents a 9.8% surge over the last ten trading sessions: “For context, that pace now exceeds the rebound following last year’s Liberation Day, marking the swiftest 10-session advance since the post-pandemic recovery in April 2020.”

From a market perspective, a swift resolution to peace talks is desirable. The true challenge will begin thereafter. The anxiety surrounding Iran fundamentally relates to its influence over worldwide oil and energy resources. Crude prices have climbed because Iran sits alongside the Strait of Hormuz, a critical Persian Gulf chokepoint for exports from the UAE, Qatar, Kuwait, and Iraq. Approximately 20 million barrels of oil pass through the strait daily, accounting for roughly 20% of global supply. A U.S. blockade of the passage, combined with Iranian threats of mining, has prevented ship traffic, severing supply lines and driving prices upward.

This has triggered a corresponding price surge. U.S. energy commodities jumped 21.3% in the most recent CPI reading, rising 19.4% year-over-year—primarily due to gasoline costs, a spike evident to consumers at every pump.

Despite these challenges, investor conduct has been atypical during Trump’s second term, with market volatility becoming a routine expectation.

“Reviewing the last 15 months of market history is a fascinating mental exercise,” stated Jack Manley, a global market strategist at J.P. Morgan Asset Management, in an exclusive interview this month. Speaking before the Iran ceasefire and subsequent talk failures, Manley remarked that markets have endured “Liberation Day, the longest U.S. government shutdown, 100% reciprocal tariffs on China, year-end airstrikes on Iran, a Venezuelan regime change, then threats regarding Greenland, a Japanese government bond market collapse, the Citrini Report, AI software stocks, precious metals, and private credit—all within about 14 months?”

“Each time a major headline hits, the market suffers a shock, dropping 2%, 5%, 10%, 15%, or nearly 20% in a short span. Yet, it has consistently shown the resilience we’ve observed for years and recovered.”

Investor behaviour

Made just weeks prior, Manley’s observations coincided with soaring oil prices as Trump pledged continued strikes on Iran. The uncertainty of that period, followed swiftly by a near-record market advance, highlights the sharp swings confronting investors and analysts.

The volatility stemming from the Iran situation is merely another “notch on the belt” for seasoned investors, Manley said, reinforcing an entrenched “this too shall pass” mentality.

“It’s incredibly easy to exit the market when everything seems to be collapsing; pinpointing the true bottom is nearly impossible,” Manley explained. “Whether you talk to professional investors like our clients or retail investors like my friends, the response is identical. It’s, ‘We’ve lost this much, but we should be down further.’ Everything between now and that hypothetical low point is just market noise.”

While few would claim to predict the actions of global governments, Manley pointed out a reality well-known on Wall Street: The Iranian conflict lacks popularity in Washington, D.C. Public support is also limited; a recent Pew Research report found 60% of Americans disapprove of Trump’s approach to Iran.

The rally could have room to extend further if de-escalation leads to lower oil prices, before markets revert to the core issues they faced pre-conflict. Manley concluded: “I don’t believe this will persist for long. It might, but I know it will conclude eventually. I am confident energy prices will decline, and stocks will refocus on the larger existential questions they were pondering before this began. I believe you can sustain a risk-on stance despite this uncertainty by looking past all the [volatility].”