A U.S. official confirmed that Israel and Hezbollah have agreed to a ceasefire beginning Friday, marking the most significant de-escalation in the Israel-Lebanon conflict in months. The deal, brokered with U.S. involvement, is expected to pause active hostilities, reducing the immediate risk of a broader regional war that had kept a geopolitical risk premium embedded in oil, defense stocks, and safe-haven assets.

The setup now is a classic 'risk-on relief' rotation: energy names with a war-premium bid and defense contractors tied to Middle East orders may give back recent gains, while Israeli equities (EIS), airlines, and regional tourism plays could see a bounce. The key watch items are whether the ceasefire holds past the first 48 hours, any Iranian response, and whether oil's geopolitical premium fades materially — all of which will determine if the relief trade has legs or collapses quickly.