Both Iran and the U.S. have expressed willingness to end the Middle East conflict. The U.S. stock market surged, with the Nasdaq soaring nearly 4%, crude oil plummeted, and gold and silver prices surged.

The U.S. and Iran both signaled a desire to end the conflict in the Middle East, with U.S. stock indexes posting their biggest one-day gain since May last year. U.S. Treasury yields continued to strengthen, international oil prices pulled back from their highs, the U.S. Dollar Index ended a five-day winning streak, and the metals market surged.

(U.S. stocks, WTI crude, and U.S. Treasury yields—performance since March)

Wall Street Daily noted that, according to statements cited by the media from Iran’s president’s press office, Iranian President Pezeshkian said Iran has a “necessary willingness to end the war,” but it needs a “guarantee to prevent aggression from happening again.” Oil prices then plunged sharply; the drop in Brent crude was even larger, and the spread between the two widened to the widest level since December 2013.

Earlier, citing Xinhua News Agency, on Tuesday evening March 31, U.S. President Trump said from the White House that the U.S. would end hostilities with Iran within “two to three weeks,” and that an agreement could be reached with Iran before then.

(WTI crude prices ended lower after experiencing violent swings)

However, the market generally stayed cautious. Bloomberg macro strategist Brendan Fagan pointed out that Tehran’s definition of “basic guarantees,” especially if tied to the ceasefire conditions previously proposed, could be a high hurdle that the Trump administration may find difficult to accept.

On Tuesday, the S&P 500 surged 2.9%, the Nasdaq jumped 3.8%, and the Dow rose 2.5%. In addition to expectations that the U.S. and Iran have “gotten unstuck,” the move also reflected a resonance of two technical factors.

(Intraday performance of U.S. benchmark stock indexes)

First, a factor that can’t be ignored is end-of-month pension rebalancing. Based on estimates, U.S. pensions need to buy about $34 billion worth of U.S. stocks at month-end; the scale is the eighth largest since 2000, and also one of the top ten purchase imbalances in history.

(End-of-month pension rebalancing volume—the eighth largest since 2000)

Meanwhile, Tuesday also triggered a large-scale short covering. A Goldman trader described it as the second-largest short squeeze since April last year, driven mainly by hedging and closing out rather than by fund managers proactively chasing the rally.

(Comparison chart of S&P 500 price action and incremental options-market capital flows; call option buying and hedging positions closing provided the main support for the index rally that day)

However, Bloomberg strategist Simon White said that, on the technical front, the market has not yet shown bottoming characteristics. The net number of New York Stock Exchange stocks hitting fresh 52-week lows is only slightly negative, whereas historically tradable bottoms often come with deeply negative readings.

The proportion of S&P 500 stocks with an RSI below 30 is still under 20%; historically, such conditions typically only indicate that the time is right for a rebound when it reaches about 40% to 50%.

(The proportion of S&P 500 stocks with an RSI below 30 remains low)

In addition, the sharp rally on Tuesday can’t hide the grim wrap-up of Q1. So far this year, the S&P 500 is down 4.6%, the Nasdaq is down 7.1%, and the Dow Jones is down 3.6%, delivering the worst quarterly performance since 2022.

From worries about an AI bubble amid an energy crisis, to credit markets under pressure amid a cloud of stagflation fears, every trading day in Q1 has tested investors’ nerves.

One of the most brutal battlefields in Q1 was the software sector. SaaS stocks fell for the third consecutive month, recording the worst quarterly performance since Q2 2022 overall.

(Software stocks plunged in the first quarter)

“Mag 7” tech giants significantly underperformed the 493 S&P 500 constituents in Q1.

(The “Big Seven” tech firms continued their softness this year trend in March)

Meme stocks logged their biggest monthly decline since December 2022 and have been down for five straight months.

(Meme stocks fell to levels seen in June last year)

At the same time, cracks in the private credit market have become increasingly visible. Investment-grade and high-yield credit spreads widened sharply in March, reaching the highest level since April last year.

(Credit spreads jumped to the highest level since April last year)

No matter how the situation in the Middle East evolves, the stagflation imprint left by Q1 is difficult to eliminate in the short term. Tony Pasquariello, head of coverage for hedge funds at Goldman, summarized the core logic on both the long and short sides as follows:

• Reasons to be bullish include that sentiment indicators are extremely bearish, CTA systematic strategy positioning has been cut sharply, large-cap short positions have been established, and the RSI levels of the S&P 500 and the Nasdaq are approaching the April 2025 lows;
• The bear case, meanwhile, argues that given this is the largest oil supply shock in history, the decline in U.S. equities is still relatively limited, signals from the physical commodities market remain unsettling, and the trajectory of global bond markets is equally intriguing.

Pasquariello’s conclusion is:

The direction of risk-reward isn’t clear, but my instinct is that downside asymmetry is still greater than upside.

On Tuesday, U.S. Treasury yields continued to fall further: the 10-year yield dropped by 3 basis points and the 2-year yield fell by 3.29 basis points.

(Since March, major Treasury yields have reversed the year-to-date downtrend)

The U.S. Dollar Index ended its five-day rally and fell sharply, down 0.7% on the day and breaking below the 100 level. But in March, the Dollar Index still rebounded by more than 2%, posting its biggest monthly rise since October 2024 and ending the preceding downtrend that had lasted for four straight months.

(The Dollar Index ended the downtrend that had lasted for four straight months)

The metals market surged on Tuesday; spot gold rose 3.5% and climbed for three straight trading days. Even so, gold still fell 11% in March, its worst single month since the Lehman crisis in October 2008.

Spot silver spiked more than 7%, reclaiming above $75. March saw a cumulative drop of nearly 20%. LME copper rose 3% on Tuesday and fell nearly 7% in March.

(Gold, silver, copper, and platinum all fell in March)

U.S. stocks broadly rose on Tuesday. The semiconductor ETF closed up more than 5.7%. On the final trading day of March, it led among U.S. sector ETFs. In Q1, the energy sector ETF gained 37.9%. Of the 11 sector indexes in the S&P 500, 9 rose. Communication Services led, up 4.42%. Information Technology followed, up 4.24%.

U.S. benchmark stock indexes:

• The S&P 500 closed up 184.80 points, up 2.91%, at 6,528.52.

• The Dow Jones Industrial Average closed up 1,125.37 points, up 2.49%, at 46,341.51.

• The Nasdaq closed up 795.988 points, up 3.83%, at 21,590.629. The Nasdaq 100 closed up 786.811 points, up 3.43%, marking its biggest one-day gain since May 2025, at 23,740.189.

• The Russell 2000 closed up 3.41%, at 2,496.374.

• The VIX (volatility index) closed down 17.45%, at 25.27.

U.S. sector ETFs:

• The semiconductor ETF rebounded 5.76% at the close. The global technology equity index ETF, biotechnology index ETF, technology sector ETF, and global airline ETF rose by up to 4.40%. The energy sector ETF fell 1.13%.

• In Q1, the energy sector ETF gained 37.91%. Utility ETF, semiconductor ETF, regional bank ETF, and biotechnology index ETF rose by up to 8.20%.

(March 31 U.S. sector ETFs)

The seven tech giants:

• The VanEck (Magnificent 7) index rose 4.40%.

• Meta rose 6.67%, Nvidia gained 5.62%, Google A rose 5.14%, Tesla rose 4.64%, Amazon rose 3.66%, Microsoft rose 3.12%, and Apple rose 2.90%.

Chip stocks:

• The Philadelphia Semiconductor Index closed up 6.24%, at 7,588.196.

• TSMC ADR rose 6.78%, and AMD rose 3.77%.

China concept stocks:

• The Nasdaq Golden Dragon China Index closed up 2.80%, at 6,753.34. It fell 7.20% cumulatively in March and fell 10.31% in Q1 cumulatively.

Other individual stocks:

• Circle rose 6.25%.

European stocks fell 8% in March. The Iran war launched by Trump wiped out the gains made in January and February. Germany’s stock market fell more than 10% in March; Norway’s stocks rose about 11.6% and were up 27% in Q1.

Pan-Europe indexes:

• The STOXX 600 index in Europe closed up 0.41%, at 583.14 points. It fell 8.00% cumulatively in March. After the Iran war was launched by the U.S. and Israel at the end of February, the overall trend continued lower, with a cumulative Q1 decline of 1.53%, while January and February continued to rise.

• The STOXX 50 index in the euro area closed up 0.50%, at 5,569.73 points. It fell 9.26% in March cumulatively and fell 3.83% in Q1 cumulatively.

Stock indexes by country:

• Germany’s DAX 30 index closed up 0.52%, at 22,680.04 points. It fell 10.30% cumulatively in March and fell 7.39% in Q1 cumulatively.

• France’s CAC 40 index closed up 0.57%, at 7,816.94 points. It fell 8.90% cumulatively in March and fell 4.08% in Q1 cumulatively.

• UK’s FTSE 100 index closed up 0.48%, at 10,176.45 points. It fell 6.73% cumulatively in March and rose 2.47% in Q1 cumulatively.

  (March 31 Europe and the U.S. major stock index performance)

Sectors and individual stocks:

• Among euro-area blue chips, Germany’s Rheinmetall (RHM) rose 2.48%, Adidas rose 2.24%, and Deutsche Börse Group rose 2.20% to finish third.

• Among all constituents of the STOXX 600 index in Europe, Hensoldt rose 6.63%, Hochschild Mining rose 5.57%, Abivax rose 5.41%, Alstom rose 5.39%, and Antofagasta rose 5.25% to finish fifth.

• In March, by sector, the STOXX 600 Personal & Household Goods index fell 15.05% cumulatively, the real estate index fell 14.53%, the autos & parts index fell 12.66%, the construction & materials index fell 12.33%, and the retail index fell 12.00%.

The 2/10-year U.S. Treasury yield fell by more than 3 basis points on Tuesday; in March, the 2-year U.S. Treasury yield rose by about 42 basis points. Germany’s 2-year government bond yield rose by more than 61 basis points in March.

U.S. Treasuries:

• At the New York close, the yield on the U.S. 10-year Treasury benchmark fell by 3.16 basis points to 4.3166%. It rose 37.91 basis points cumulatively in March and rose 14.96 basis points cumulatively in Q1.

• The yield on the 2-year U.S. Treasury fell by 3.49 basis points to 3.7930%. It rose 41.81 basis points cumulatively in March and rose 31.99 basis points cumulatively in Q1.

  (U.S. Treasury yields by major maturity)

Eurozone bonds:

• At the close in European trading hours, Germany’s 10-year government bond yield fell by 3.1 basis points to 3.004%. It rose 36.1 basis points cumulatively in March and rose 14.9 basis points cumulatively in Q1.

• Germany’s 2-year bond yield fell by 0.4 basis points to 2.616%. It rose 61.2 basis points cumulatively in March and rose 49.5 basis points cumulatively in Q1.

• The UK’s 10-year government bond yield fell by 1.7 basis points to 4.918%. It rose 68.5 basis points cumulatively in March and rose 41.8 basis points cumulatively in Q1.

The U.S. Dollar Index ended its five-day rally, falling sharply by 0.7% intraday and breaking below the 100 level. It rose more than 2.4% in March. Crypto assets shook and climbed: Bitcoin rose 2.4% and Ethereum rose by more than 4%.

U.S. dollar:

• At the New York close, the ICE U.S. Dollar Index fell 0.53% to 99.979. It rose 2.43% cumulatively in March and rose 1.69% in Q1 cumulatively.

• The Bloomberg Dollar Index fell 0.48% to 1,216.37. It rose 2.44% cumulatively in March and rose 1.03% in Q1 cumulatively.

  (Bloomberg Dollar Index)

Japanese yen:

• At the New York close, the dollar versus yen fell 0.55% to 158.83 yen. It rose 1.77% in March and rose 1.31% in Q1.

• In March, the euro versus yen fell 0.49% cumulatively; the pound versus yen fell 0.14% cumulatively in March.

Offshore yuan:

• At the New York close, the dollar versus offshore yuan was 6.8892. Compared with the previous New York close on Monday, it fell by 271 points. Trading throughout the day was largely in the 6.9216–6.8866 yuan range.

Cryptocurrencies:

• At the New York close, crypto assets shook and climbed: Bitcoin rose 2.4% and Ethereum rose by more than 4%.

(Bitcoin price rebounded and rose in March)

The Abu Dhabi Murban crude oil futures in the Middle East fell 1.58% to $109.03 per barrel. It rose 48.72% cumulatively in March and rose 78.10% in Q1.

Crude oil:

• The WTI May crude oil futures settled at $101.38 per barrel.

(WTI crude oil futures)

• The Brent May crude oil futures settled at $118.35 per barrel.

• The Abu Dhabi Murban crude oil futures in the Middle East fell 1.58% to $109.03 per barrel. It rose 48.72% cumulatively in March and rose 78.10% in Q1.

Natural gas:

• NYMEX April natural gas futures settled at $2.8840 per million BTU.

Metals surged. Spot gold rose 3.5% and climbed for three straight trading days. Even so, gold still fell 11% cumulatively in March. Spot silver spiked more than 7%, reclaiming above $75, and fell nearly 20% cumulatively in March. LME copper rose 3% on Tuesday and fell nearly 7% in March.

Gold:

• At the New York close, spot gold rose 3.49% to $4,668.20 per ounce. It fell 11.58% cumulatively in March and rose 4.90% in Q1.

(Spot gold price)

• COMEX gold futures rose 3.14% to $4,700.60 per ounce. It fell 11.13% cumulatively in March and rose 4.03% in Q1.

Silver:

• At the New York close, spot silver surged by more than 7%, reclaiming above $75, and fell nearly 20% cumulatively in March.

• COMEX silver futures rose 6.77% to $75.345 per ounce.

Other metals:

• LME copper futures settled up $112 to $12,336 per metric ton. LME aluminum futures settled up $66 to $3,467 per metric ton.

• LME nickel futures settled down $153 to $17,110 per metric ton. LME zinc futures settled up $44 to $3,226 per metric ton.

Risk warning and disclaimer

        The market involves risk; investing requires caution. This article does not constitute personal investment advice, nor does it take into account the specific investment objectives, financial conditions, or needs of any individual user. Users should consider whether any opinions, viewpoints, or conclusions in this article fit their specific circumstances. Investing based on this is at your own risk.