Crude oil started unwinding months of conflict premium after the Trump administration said the Strait of Hormuz has reopened as part of a deal reached with Iran on Sunday. West Texas Intermediate slid to around $80 a barrel on Tuesday, its lowest since early March, after President Donald Trump said on social media that the agreement was complete and the U.S. naval blockade would be lifted.
But beneath the rally in oil, financial markets are sending a different signal. Three corners of the market that the war hammered have still not climbed back to where they traded the day it began.
The Laggards the Rally Left Behind
Wall Street has continued to hit record highs since the U.S. attacked Iran in February. The SPDR S&P 500 ETF Trust (SPY) rose 10% throughout that time. But not all sectors have shared in the rally. Data from CountryETFTracker, which measures performance against the Feb. 27 starting point of the conflict, shows three U.S. industry funds still in negative territory nearly four months later:
Gold Miners Took a Double Hit
Gold miners were squeezed on both sides during the Iran war. Gold itself has fallen about 17% from its Feb. 27 level, and silver is down roughly 24% as rising Treasury yields lifted the opportunity cost of holding metals that pay no income. At the same time, the war drove energy costs higher, inflating the fuel and power bills that dominate mining budgets. Lower output prices met higher input costs.
Shares of Newmont Corp. (NEM), the world's largest gold miner, remain 18% below their pre-war levels, though they rallied 5.6% on Monday after President Trump announced a peace deal.
Rates Crushed Nuclear and Housing
Nuclear and uranium names were caught in the same vise. The companies that build reactors and dig for uranium have cash flows that are years or decades in the future, making them acutely sensitive to interest rates. When the oil shock pushed inflation to a 4.2% annual rate in May and forced markets to price out Federal Reserve cuts, the 10-year Treasury yield climbed above 4.5% and the present value of those distant payoffs shrank.
Homebuilders ran into the same wall. Higher long-term yields feed straight into mortgage rates, and richer mortgage rates cool buyer demand. The rate backdrop punished nuclear and housing alike.
The Reversal Test
The common thread is rates, and rates were a function of the war. The conflict pushed oil higher, oil pushed inflation higher, and inflation pushed yields higher. Every link in that chain leaned on these three groups. Now the chain is running in reverse. If the cease-fire holds and oil keeps sliding, May's inflation print may mark the ceiling of this cycle, and the yield pressure that flattened gold miners, nuclear, and homebuilders could ease with it.
What's Next?
The Federal Reserve delivers its next decision on Wednesday, Kevin Warsh's first as chair, with fresh projections that will tell investors how far the reversal might run. Even with the agreement reached on Sunday, the situation remains fragile. Iran has put Israel on notice that further military action in Lebanon or any ongoing presence on Iranian soil would be considered a breach of Tehran's newly signed agreement with Washington.
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