The stock market reopened following a prolonged disruption triggered by the 40-day war and the suspension of economic activity, even as Iran’s economy continues to grapple with the aftershocks of conflict, political uncertainty, and disruptions to production chains. Trading resumed while parts of the country’s industrial sector remain affected by direct wartime consequences, ranging from damage to production infrastructure to shortages of raw materials caused by maritime blockades.

Nevertheless, market performance in recent weeks has defied pessimistic expectations, with major indices posting remarkable gains and raising important questions about the sustainability, or fragility, of the rally.

The capital market has experienced one of its strongest short-term booms in recent years. Rapid index growth, rising trading volumes, and the return of part of the sidelined capital to the stock exchange have been viewed as signs of a partial restoration of confidence among economic actors. This development comes after a prolonged period in which the market suffered from chronic stagnation, declining retail investor confidence, and a migration of liquidity toward alternative assets. A different atmosphere has now emerged, one driven less by fundamental economic changes than by shifting expectations and hopes for lower political risk.

In reality, what is driving the market today is above all the “economics of expectations.” Investors are making decisions not on the basis of firmly established economic realities, but on future possibilities. The temporary ceasefire, reduced concerns over a broader conflict, and speculation regarding the future of Tehran–Washington negotiations have created a climate of cautious optimism. As a result, part of the capital that moved into safer assets during the war and subsequent instability has begun returning to equities.

However, it should not be overlooked that the capital market continues to operate against a backdrop of uncertainty. Iran’s economy remains affected by both the direct and indirect consequences of the war. Some manufacturing companies are operating below capacity due to bombing-related damage or supply-chain disruptions, while many businesses continue to face shortages of raw materials. Therefore, although the rise in market indices has created a more hopeful picture, it is still too early to speak of a definitive improvement in the economy’s fundamental indicators.

This reality means that the future direction of the stock market is now more closely tied to political variables than ever before. The outcome of potential negotiations with the US, the fate of the temporary ceasefire, and the prospects for a more durable agreement have become decisive factors in assessing the market’s trajectory.

This caution was also evident in a recent interview between Nournews and Hojjatollah Seydi, head of the Securities and Exchange Organization. Rather than offering a definitive outlook, Seydi described the market’s future as dependent on economic and political developments, particularly the outcome of negotiations and the status of regional tensions, a position that itself reflects the complexity of decision-making in today’s capital market.

From a behavioral perspective, after its sharp recent gains, the market is likely to enter a period of volatility and temporary correction. Short-term investors who entered at lower price levels will naturally seek to lock in profits at current valuations. Such behavior does not necessarily signal the end of the upward trend; rather, it may indicate a gradual return of rationality to a market that was, to some extent, driven by post-war sentiment in the early days following its reopening.

Alongside these factors, the role of economic policymakers and market-support institutions will remain critical. If efforts to preserve stability, manage large-scale share offerings, and prevent psychological shocks continue, the likelihood of a sustained and balanced upward trend will increase. Conversely, any sudden resurgence of political tensions or conflicting signals regarding negotiations could once again fuel uncertainty.

Accordingly, the outlook for the stock market in the coming weeks can neither be described as decisively bullish nor as inevitably heading back into recession. Iran’s capital market currently stands at the intersection of “political hope” and “economic uncertainty,” where every development related to negotiations, the ceasefire, or the restoration of production capacity has the potential to alter the direction of capital flows.

The more likely scenario in the weeks ahead is continued movement along a volatile but generally positive trajectory, a trend whose durability will depend above all on reducing uncertainty and providing greater clarity regarding the country’s political and economic outlook.