The recent escalation in the Middle East situation and the resulting market volatility are definitely worth paying attention to. After the U.S.-Iran talks broke down last weekend, market sentiment briefly fell into panic, but over the past couple of days, we’ve actually seen some interesting signs of reversal.

First, let’s look at the energy market. The U.S. military has imposed an unprecedented blockade on the Strait of Hormuz. IEA Executive Director Birol pointed out that this has led to a disruption of roughly 13 million barrels of daily supply, the most severe such disruption in history. What’s interesting, though, is that crude oil prices initially pushed above $100 and then fell back, and are now hovering around $98. This reflects a split in market judgments about how long the conflict will last. Chicago Fed President Goolsbee’s view is also quite instructive: based on futures prices, he believes the market expects the surge in oil prices to be a short-term phenomenon, with potentially limited real impact on the U.S. economy.

More noteworthy is the performance of cryptocurrencies. During this bout of risk-averse sentiment, Bitcoin actually rose by more than 5%, and is now standing at around $76,800. Ethereum’s gains are even stronger—up more than 8%—trading near $2,270. This suggests that the market’s attitude toward risk assets is improving, and many investors have started to reassess the conflict’s real impact.

The stock market has also seen a clear rebound. All three major U.S. stock indices are up across the board, with technology stocks leading the way. Companies such as Oracle, Intel, and Microsoft have all performed well. Interestingly, crypto mining firms and related hardware manufacturers are also among the top gainers, with some crypto exchange platform stocks rising nearly 4%. European stocks, by contrast, were relatively weaker; the stock markets in Germany, France, and the UK all fell slightly.

In commodities, London aluminum futures hit a four-year high, up more than 3%, because Middle Eastern aluminum exports have been disrupted, boosting global supply expectations. Gold fell slightly, indicating that safe-haven demand is gradually easing. The U.S. Dollar Index also hit a one-and-a-half-month low, around 98.37, while the euro and the yen have both appreciated against the dollar.

Most worth watching is the progress on negotiations. According to the latest reports, the U.S. and Iran are still in contact. Inside the U.S. government, they are discussing the details for a second round of face-to-face talks, and the next round of direct negotiations may be held in Islamabad on the 16th. Trump said both sides are urgently hoping to reach an agreement, and the main sticking point is the nuclear issue. This kind of negotiation signal has a clear positive boost to market sentiment.

It’s also worth mentioning BlackRock’s latest shift in stance. A few weeks ago, they turned neutral due to the escalation of the conflict, but now they have resumed an overweight view on U.S. equities. They believe the Middle East conflict’s impact on global economic growth is manageable. At the same time, expectations for corporate earnings are still rising ahead of the upcoming earnings season—especially with performance in the technology sector—which is enough to support a rebound in risk appetite.

In addition, the Federal Reserve’s bond holdings book losses have been shrinking as well, falling from last year’s $1.06 trillion to $844.2 billion. Although this is mainly an accounting change, it also reflects an improvement in the market environment.

Overall, it appears that market impact from this wave of conflict is gradually being absorbed. Although the risk of supply disruptions remains, progress in negotiations, improved market sentiment, and support from corporate earnings expectations are prompting investors to reassess the conflict’s long-term impact. The strong performance of cryptocurrencies and technology stocks, to some extent, reflects the market repricing of risk assets. Going forward, attention should be paid closely to negotiation developments and movements in the energy market.