Ceasefire agreement becomes worthless paper! Trump's words reverse the situation in the Middle East, top strategists feel shocked and exclaim "All research is in vain".

Notice that, just one day after making investment decisions regarding the easing of tensions in the Middle East, BCA Research's chief investment strategist Jean-Marco Papic had to cut his losses and revoke his recommendation. US President Trump had earlier stated that the war with Iran had restarted. Last Tuesday, Papic advised clients to short the US stock market and instead buy stocks in Europe and Japan. He said that US stocks, which had provided a relatively safe haven feature during peak geopolitical tensions, had lost some of their appeal since then. However, within a few days, Trump suddenly announced that the US-Iran ceasefire was "over," forcing Papic to close his recommendation and incur a 1.1% loss. Less than a month after the temporary peace agreement between the US and Iran, the two countries once again teetered on the brink of all-out war. This completely tore up the investment strategies of market observers who had banked on the worst in the Middle East conflict being over. He said in an email, "You spend time uncovering an interesting argument, support it with clear evidence, and then 'snap,' you are asked to throw all of that in the trash." During the early stages of the Iran war, the safe haven status of the energy sector and the US dollar protected the US stock market. When the Middle East conflict broke out this spring, the US stock market outperformed other regions of the world due to the US dollar rising as a major safe haven asset during the conflict, and the US achieving energy independence at a time of rising oil prices. Strategists and fund managers from Royal Bank of Canada, Clark Capital, and Mullen Capital stated that if hostilities continued, US stocks were likely to outperform European counterparts once again. Mike Bell, a strategist at Royal Bank of Canada's asset management division in London, believes that if tensions between the US and Iran lead to the prolonged closure of the Strait of Hormuz, US cyclical stocks are likely to better withstand this pressure compared to their European counterparts. "It is important to remember that given the limited time the Strait of Hormuz has been open, not enough time has passed for oil inventories to be replenished, so a prolonged closure starting now would be more serious than the initial one." Last weekend, Iran stated that the strait, as a crucial global oil flow channel, would be closed "until further notice." The US Central Command objected to this, while the Global Maritime Information Center reported on Sunday that transit was still possible through the southern route of the waterway. Due to recent events (including new attacks exchanged between the US and Iran), Brent crude oil futures rose by over 3% on Monday. The S&P 500 index futures fell by 0.3% due to semiconductor stocks weakening again. Dominic Paradeo, chief multi-asset strategist at Morningstar Wealth, stated that his investment team is considering increasing their positions in trades made during the early stages of the Iran war. Latin American stocks are among them. He said that although the stronger US dollar has reduced the attractiveness of emerging market stocks, many energy-exporting countries in the region benefit from higher oil prices. He added that the fundamentals of US tech giants are strong, and if these stocks see a pullback, the team will consider increasing their allocation to them. While the rise of large tech stocks has propelled the broader stock market higher, renewed hostilities last week caused sectors related to travel and leisure to experience intense volatility. The S&P 1500 Airlines index fell by 5% last week. The S&P 500 Hotels, Resorts, and Cruise Lines index fell by 1.7%, with cruise operator Carnival Cruise and online travel company Booking leading the declines. Phil Wool, chief research officer at RuiLian, said that in other parts of the US market, if the strait remains closed, traders should expect a familiar set of winners and losers to re-emerge. Energy companies like ExxonMobil would benefit from higher oil prices, while investors would seek refuge in defensive consumer staples stocks. Non-discretionary stocks, including airlines, would be particularly vulnerable. Airlines stocks drop It remains to be seen whether the renewed tensions in the Middle East will disrupt the broader uptrend of US stocks. The S&P 500 index surged nearly 20% between its late-March low and the recent record high in early June. The Chicago Board Options Exchange (Cboe) Volatility Index (VIX) has remained below 16, with uncertainty surrounding AI trading being the main driver of stock market volatility. Wool said that if the conflict exacerbates persistent inflation, Wall Street will face a "wake-up call." "Rising prices are not good for the kind of growth that investors are expecting." As with trading patterns, the problems investors face at this time have also become familiar. Will the attacks continue or escalate? If oil prices spike and the stock market falls, will Trump try to intervene to rescue it? Jeff Mullenkamp, fund manager at Mullen Capital, said, "I think the prudent approach is to ignore it because it really doesn't matter; or is it wise to pay close attention and get more oil risk exposure than I currently have? These are the kind of questions I am trying to sort out, but so far, I haven't had much success."