The ink on the US-Iran memorandum of understanding is barely dry, but financial markets are already showing signs of strain. Despite the historic signing of a 14-point ceasefire framework on June 17, electronically signed by US President Donald Trump and Iranian President Masoud Pezeshkian, seasoned market watchers say the deal is far from a green light for risk assets.
"We are just ripe with uncertainty," says Seth R. Freeman, Senior Managing Director at GlassRatner Advisory. "Market players do not like this level of uncertainty."
A deal that raises as many questions as it answers
The agreement extends the current US-Iran ceasefire for 60 days, with the goal of a permanent end to the war, but critical issues including the fate of Iran's nuclear program remain unresolved.
Adding to the tension, Iran said it would close the Strait of Hormuz again after accusing the US and Israel of violating the memorandum of understanding by Israeli troops not withdrawing from southern Lebanon. That threat alone is enough to send shockwaves through energy and equity markets worldwide.
Freeman points to the whipsaw effect of competing declarations from both sides. On one hand, Trump declared the strait open; on the other, Iranian leadership pushed back, blaming Washington for not reining in Israel. Senator Lindsey Graham has already warned that if the deal fails, "President Trump is going to take the Strait of Hormuz over by force."
Crude oil: A market held hostage
Brent crude, currently trading sub-$80, remains highly sensitive to every development. Freeman notes that oil was in the mid-$60s before hostilities began, meaning the market has only recovered half its war-time surge. The outlook is complicated further by depleted global reserves and a global food price lag that could worsen inflationary pressure in the months ahead.
The ongoing closure of the Strait of Hormuz has prevented oil from leaving the Gulf, driving up prices across the world, and any re-escalation risks pushing crude back toward $90 or higher.
China: A market still struggling
While the Middle East dominates headlines, China's markets remain a separate concern for global investors. Freeman attributes continued underperformance of the Shanghai and Hang Seng indices not to oil exposure, China has sourced crude from alternative suppliers, but to a deeply troubled property sector. A massive residential real estate overhang continues to strain large Chinese banks, creating a persistent "risk-on, risk-off" dynamic that foreign investors find difficult to navigate.
India: A relative safe harbour?
Interestingly, Freeman sees India as somewhat insulated from the AI-driven bubble risk facing US tech markets. Unlike Wall Street's mega-cap giants trading at sky-high multiples on distant earnings promises, India's equity landscape is different. More importantly, Freeman is bullish on India's long-term AI potential. "I can imagine some real mega companies coming out of India given the computing knowledge and power and mathematicals," he says, citing the country's deep bench of engineering and data talent.
The bottom line for investors
While "encouraging progress was made" in the first round of US-Iran talks, all sides have agreed only to a High-Level Committee to continue technical negotiations within the 60-day deadline. Until a durable, enforceable agreement emerges, one that addresses nuclear enrichment, Lebanon, and Hezbollah, markets are likely to remain trapped in a cycle of volatility.
For now, Freeman's advice is implicitly clear: this is not a week to chase risk.
