Wednesday 8 April could mark the beginning of a stock market recovery. Whether it is or not depends entirely on two words: ceasefire sticks.
A big day for markets
The market surged today. The FTSE 100 added 2.7%. Germany’s DAX surged 4.9%. And US market jumped at the open. What’s more, oil plunged 15% to below $100 a barrel, marking the steepest single-day fall in nearly six years. Risk assets rallied across the board, from stocks to emerging markets to Bitcoin.
However, context matters.
This wasn’t a rally from a position of strength. Before today’s session, markets had been badly bruised by the conflict in the Gulf. The Nasdaq had already fallen more than 10% from its October 2026 high — the definition of a correction.
The S&P 500 was sitting roughly 9% below its peak, within touching distance of correction territory itself. The FTSE, though more resilient thanks to its energy and commodity weighting, had spent months grinding lower as inflation fears and recession risk weighed on sentiment.
While there had been Trump’s intervention in Venezuela and AI-related worries, the correction was caused by rising oil prices on the back of the war in the Gulf. Brent crude had surged more than 40% since the conflict began, rising from around $72 to over $106 a barrel after Iran closed the Strait of Hormuz.
That shock reignited inflation fears globally, froze central bank easing cycles, and raised the prospect of a stagflationary recession — the worst combination for equities.
The ceasefire helps to unwind all of that. Oil retreating below $100 gives the US Federal Reserve and the Bank of England room to cut rates. Lower energy costs reduce input inflation. Consumer confidence can begin to rebuild.
But the critical word is if. This is a two-week agreement, not a peace deal. The last time markets staged a major relief rally on a geopolitical development, the optimism lasted eleven days. If talks collapse, today’s gains will be reversed.
So, today could be a turning point…
Investing in the volatility
Broadly, I invest when the stock market pulls back and sit tight when it rises like today.
That said, there are still plenty of stocks that are trading well below their fair value. One of these is Jet2 (LSE:JET2).
Jet2 was punished by the conflict. As an airline and package holiday operator, it faced surging jet fuel costs as oil prices rose more than 40% from pre-war levels.
The stock now trades at 6.6 times forward earnings despite sitting on a tidy net cash position — about £800m, equivalent to two years net income.
Jet2 hedges fuel — roughly 75% of fuel for the year was already hedged. This meant it wasn’t too exposed to near-term surges in jet fuel prices.
However a prolonged conflict would have eventually unraveled that safety blanket. Therefore, the risk is that this ceasefire doesn’t stick and jet fuel prices remain elevated.
Still, at current levels, I think Jet2 looks worth considering for patient investors. I believe it’s one of the most under-appreciated stocks in the UK, with long-term growth supported by efficient fleet transition and new operations at Gatwick.
