Rebound or reversal? After leaving the fire scene, please do not return.

Why do conflicting signals from the U.S.-Iran negotiations trigger a market rebound?

On March 23, the A-share market experienced a Black Monday. The next day, influenced by the U.S. and Israel actively sending negotiation signals, global markets surged across the board, and the A-shares also rebounded.

Looking at the closing situation on the morning of March 24, the market showed a pattern of oscillation and divergence—Shanghai Composite up 0.95%, Shenzhen Component up 0.26%, the STAR 50 Index leading with a 1.25% gain, while the ChiNext Index fell 0.79%. Both markets maintained high trading volumes, indicating active trading sentiment. The Hong Kong market performed even better, with the Hang Seng Index up 1.6% and the Hang Seng Tech Index up 1.17%.

For investors who just experienced a sharp decline, this rally is undoubtedly a shot of confidence, sparking a desire to buy the dip. However, before the market’s main risk-averse logic reverses, a single day’s rebound does not mean a trend reversal. At this moment, it’s worth repeatedly reminding ourselves of a classic investment adage: after leaving the fire, do not return.

Reviewing these two days’ market movements, the trigger for the rebound is clear—signals from the U.S. and Israel regarding negotiations. On March 23, U.S. President Trump stated on social media that the U.S. and Iran had “very good and productive discussions over the past two days,” and based on this, he instructed the Department of Defense to delay military strikes on Iranian power plants and energy infrastructure by five days. The market quickly interpreted this as a sign of easing tensions, and combined with overnight overseas market gains, risk appetite was rapidly restored. Funds previously suppressed by panic sentiment began to re-enter, pushing the indices higher.

But the key question is: Has the situation truly eased in a substantive way? From the latest information, the so-called “negotiations” show obvious contradictions—Iran firmly denies any direct or indirect contact with the U.S., with the Foreign Ministry explicitly stating “no dialogue exists,” and Speaker of Parliament Larijani even publicly said that the false news spread by the U.S. aims to manipulate financial and oil markets. Senior security officials have called Trump’s remarks “psychological warfare.” Both sides are only expressing the U.S. side’s willingness to negotiate, not reaching any real agreement; the U.S. president’s delay in military action does not mean the root causes of conflict have been resolved.

On the other hand, physical damage to energy facilities remains, and the blockade of the Strait of Hormuz has not been lifted. Iran claims the strait has “not been fully closed,” but also emphasizes it is “closed only to enemies and harmful traffic,” warning that if the U.S. threatens to attack Iranian power plants, Iran will immediately take “punitive” measures, including a full closure of the Strait of Hormuz. Damage to dozens of energy facilities across the Middle East cannot be repaired in just a few days. In other words, the core variables supporting this market adjustment—such as the restructuring of oil supply gaps, inflation expectations, and the resulting monetary tightening pressures—have not undergone any substantial change.

In this context, the market’s rebound is more of an emotional stress response rather than a fundamental logical reversal. When good news remains at the level of “verbal signals” rather than “substantive progress,” the sustainability of the rebound is often questionable.

Sector performance also reveals this fragility. In the A-shares market, cyclically sensitive sectors like non-ferrous metals, utilities, and environmental protection lead the gains, while oil and petrochemical sectors fell 1.24%, and coal also declined. In Hong Kong, the materials sector surged 4.24%, with financials, consumer, and tech sectors generally rising, but the energy sector dropped 1.4%. This structural divergence indicates that market opinions on the situation are sharply divided—some funds are betting on a rebound, while others are taking profits in energy stocks.

Experienced investors know well that before major uncertainties are resolved, “fake moves” are abundant in the market. A seemingly strong rebound may just be a brief respite in a downtrend, and chasing in at this point can trap investors in a “buying the middle of the dip” passive position.

From a broader macro perspective, the core contradiction facing global markets is the risk of stagflation driven by geopolitical conflicts, not just emotional reactions to isolated events. This means that only when two signals turn clearly in a positive direction can the market truly reverse: first, a tangible recovery in energy supply—such as the reopening of the Strait of Hormuz or the repair of damaged facilities entering a predictable process; second, effective control of inflation expectations, with central banks easing monetary tightening pressures. Until then, any message-based rebound lacks a solid foundation, and rushing into the market is akin to returning to a fire before it’s fully extinguished.

This is not pessimism but a basic respect for risk. One of the biggest pitfalls in investing is substituting short-term volatility for long-term judgment. A single day’s rise can easily create the illusion that “the worst is over,” leading to complacency about underlying risks. But in reality, market bottoms are rarely formed overnight; they require time for panic to fully release, selling pressure to gradually exhaust itself, and for long-term value investors to slowly step in. This process often involves repeated oscillations and tests—patience and calm are essential.

For ordinary investors, the most rational approach now may be “patience and waiting.” Waiting is not passive inaction but maintaining clarity amid uncertainty, sticking to your position limits, and resisting short-term rebounds’ temptations. The truly worthwhile moment to heavily deploy is when the fundamental logic shows a clear reversal, not just because the market has fallen or rebounded. The fire is still burning, and the smoke has not yet cleared; turning back now involves greater risk than opportunity.

After leaving the fire, do not return. This is not just a slogan but a survival rule proven through countless market cycles. When the dust settles, risks are cleared, and the logic reverses, then entering calmly is no problem. Until then, patience and watching from the sidelines may be the safest choice.

Author’s note: These are personal opinions for reference only.