Market drivers and catalysts
Equities: Wall Street neared records, Europe cheered lower oil, and Asia stayed firm as chip demand kept risk appetite alive.
Volatility: Iran talks, PPI relief, VIX easing
Digital Assets: Risk-on tone, IBIT/ETHA strength, crypto equities outperform
Fixed Income: Global yields ease back as crude oil prices drop. US treasury yields hit more than three-week lows.
Currencies: US dollar sells off, with EURUSD, GBPUSD and other USD pairs trading near levels prevailing before war in Iran broke out.
Commodities: Crude falls on peace talk optimism; copper surges on supply constraints while gold tests resistance
Macro events: US Mar. NAHB Housing Market Index, US Fed Beige Book, Australia Employment Data (Thu)
Macro headlines
The US and Iran are preparing for a second round of peace talks in the coming days, with Tehran reportedly considering a pause in shipments through the Strait of Hormuz to smooth negotiations. The US meanwhile is pressing ahead with a naval blockade of Hormuz to curb Iran's oil exports, with more than 20 non-Iran linked commercial ships transiting the strait in the last day, a notable pickup.
Chicago Fed President Austan Goolsbee said the energy price surge from the Iran war may push back interest rate cuts.
ECB President Christine Lagarde said higher energy costs have pushed the euro zone away from the central bank's baseline outlook, though not enough to warrant raising interest rates.
BoJ officials are likely to consider raising their inflation forecast sharply at this month's policy meeting.
US producer prices rose 0.5% m/m in March 2026, below the 1.1% forecast. Goods prices jumped 1.6% on an 8.5% energy surge tied to the Iran conflict, while food fell 0.3% and services were flat. PPI climbed 4% y/y, and core PPI (excluding food, energy, trade) rose 0.2% m/m and 3.6% y/y.
The IMF cut its 2026 global growth forecast to 3.1% from 3.3%, citing fallout from the Middle East conflict, but kept 2027 at 3.2%. It says the Iran-related energy shock rivals 1974’s in scale but notes greater resilience. It now projects 2026–27 growth of 2.3% and 2.1% for the US, 4.4% and 4.0% for China, 1.1% and 1.2% for the Euro Area, 0.8% and 1.3% for the UK, and 0.7% and 0.6% for Japan, with global inflation edging up in 2026 before easing in 2027.
Treasury Secretary Scott Bessent said the US economy remains strong and expects growth could exceed 3% to 3.5% this year despite the Iran war.
Macro calendar highlights (times in GMT)
0900 – Eurozone Feb Industrial Production
1100 – US MBA Mortgage Applications
1230 – US March Import, Export Prices
1230 – US Apr. Empire Manufacturing Survey
1400 – US Apr. NAHB Housing Market Index
1430 – EIAs Weekly Crude and Fuel Stocks Report
1800 – Fed Beige Book
0130 – Australia Mar. Employment Data
Earnings this week
Today/Wednesday: ASML, Bank of America, Morgan Stanley, Progressive Corporation, PNC Financial Services
Thursday: TSMC, Netflix, PepsiCo, Abbott Laboratories, Charles Schwab, Prologis, Bank of New York Mellon, US Bancorp, Marsh & McLennan, Travelers Companies, Infosys, Tesco
Friday: Truist Financial, Fifth Third Bancorp, Ericsson
For all macro, earnings, and dividend events check Saxo’s calendar.
Equities
USA: The S&P 500 rose 1.2% to 6,967.38 and the Dow Jones rose 0.7% to 48,535.99 as softer producer-price data and renewed talk of U.S.-Iran negotiations pulled oil lower and lifted risk appetite. JPMorgan was little changed after beating estimates on record trading and stronger dealmaking, while Goldman Sachs rose 2.1% as investors looked past softer fixed-income trading and focused on strength in equities and investment banking, and Citi gained 2.6% after a strong earnings beat driven by its highest quarterly revenue in a decade. Western Digital and Seagate rose 4.6% and 3.9% to fresh highs as investors kept rewarding the artificial-intelligence storage trade. The next test is simple enough: earnings now need to justify a market that is acting as if geopolitics is a temporary inconvenience.
Europe: The Stoxx Europe 600 rose 1.0% to 619.95, the DAX gained 1.3% to 24,044.22, the CAC 40 added 1.1% to 8,327.86, and the FTSE 100 edged up 0.3% to 10,609.06 as hopes for renewed U.S.-Iran talks pushed Brent below $100 and eased pressure on Europe’s inflation-sensitive sectors. Intertek jumped 12.6% after saying it was considering a split of its businesses, Deutsche Bank gained 3.8% as banks advanced, and ASML rose 1.9% ahead of results, while Shell fell 2.7% as lower crude hurt energy names. Markets now turn to ASML’s numbers for a reality check on whether the chip optimism still has proper backing.
Asia: Asian equities extended the relief move, with South Korea’s Kospi rising 2.6% to 6,183.21, Japan’s Nikkei 225 up 2.4% to 57,877.39, Hong Kong’s Hang Seng adding 0.9% to 26,216.58, and Taiwan’s benchmark gaining 2.0% to a record 37,064.16 as investors paired lower oil with familiar artificial-intelligence enthusiasm. Samsung SDS surged 20.8% after KKR agreed to buy $820 million of convertible bonds and become a long-term strategic adviser, while TSMC helped drive Taiwan higher ahead of Thursday’s earnings after reporting 35% first-quarter revenue growth last week. Asia still looks happiest when chips are strong and crude stops trying to be the main character.
Volatility
Volatility continued to ease as markets leaned into improving macro signals, with hopes of renewed U.S.–Iran talks reducing immediate oil disruption risk, while a softer-than-feared U.S. PPI print helped stabilise inflation expectations. The VIX closed at 18.36 (-3.97%), down from recent highs above 25, suggesting the market has stepped back from stress mode but remains alert to headline risk. This remains a geopolitics-driven tape: further progress on Iran could keep volatility contained, while any escalation would likely reprice risk quickly.
Options pricing shows the S&P 500 expected to move about 71 points (1.02%) into week-end expiry, and around 34 points (0.49%) for today’s session.
For today’s expiry, the near-the-money options still show a modest put skew, meaning investors continue to pay slightly more for downside protection than upside exposure, even as markets move higher.
Digital Assets
Digital assets were relatively stable, tracking the broader risk-on tone seen in equities as easing oil prices and Iran-related optimism supported sentiment. Bitcoin traded around $73,992 (-0.23%), with Ethereum near $2,320 (-0.10%), both holding recent gains after briefly pushing higher earlier in the week.
ETF flows remain a key signal: IBIT rose +1.30% to $42.13 and ETHA gained +2.40% to $17.49, suggesting continued investor interest despite mixed broader flows earlier in the week. Crypto-linked equities outperformed, with Coinbase +5.36% and MicroStrategy +3.82%, pointing to selective risk-taking. Among altcoins, XRP traded around $1.36 (-0.46%) and Solana near $83.00 (-0.88%), showing a more mixed and less aggressive tone.
- Overall, the market looks stable but not euphoric, with investors participating in upside while staying mindful of macro-driven risk.
Fixed Income
US treasuries rallied Tuesday as oil prices fell sharply once again. The benchmark 2-year US treasury yield dropped below 3.75% to post its lowest daily close in more than three weeks. The benchmark 10-year treasury yield closed Tuesday just below 4.25%, likewise posting its lowest daily close in more than three weeks.
US high yield corporate bonds rallied again Tuesday amidst widespread strong risk sentiment. The Bloomberg measure we track of the spread between US high yield bonds and US treasuries fell to the lowest levels since mid-February, at 268 basis points, some 11 basis points tighter than Monday’s close.
Japan’s government bonds rallied again Wednesday, with the benchmark 2-year JGB yield nudging a basis point lower to below 1.375%, while the benchmark 10-year JGB yield fell over a basis point to 2.405% and the benchmark 30-year JGB fell more than four basis points to 3.60%, eyeing its lowest daily close in nearly three weeks.
Commodities
Oil fell 4.6% on Tuesday, extending a two-day decline as the US and Iran look to arrange a second round of peace talks. Traders are increasingly looking beyond the worst-ever supply disruption, including the US blockade of the Strait that has prevented Iranian exports from reaching the market. At the same time, surging prices for physical crude and refined products such as gasoline are squeezing consumers and beginning to weigh on demand, with the International Energy Agency now forecasting a decline in consumption this year. WTI briefly dipped below USD 90 in Asia before once again finding support around USD 86.50.
US natural gas declined for a fifth consecutive session, hitting a 17-month low near USD 2.60 per MMBtu. The move reflects weaker oil prices alongside weather-driven demand softness, with an exceptionally mild end to winter and a warm start to spring pointing to a growing storage surplus in the weeks ahead. In Europe, the TTF benchmark fell below USD 15, down from a USD 21 peak last month, although still comfortably above pre-war levels near USD 10.
Copper has now erased its Middle East-driven losses, with the July High-Grade contract rallying to USD 6.2 per pound - up 16% from the March low at USD 5.3. The recovery reflects a shift in focus from demand destruction fears to emerging supply constraints. Notably, sulfuric acid - critical for leaching oxide ores in key producing regions such as Chile, Peru and the DRC - is becoming increasingly scarce, with roughly half of seaborne sulfur flows passing through the Strait of Hormuz.
Gold and silver moved higher in Asian trading, with gold briefly surpassing USD 4,850, marking the 50% retracement of the USD 1,500 correction from January to March. A softer dollar has supported the recovery; however, a sustained breakout likely depends on further constructive developments in the Middle East.
Currencies
The US dollar continued its sell-off Tuesday and has fallen to its lowest level against many major currencies in weeks, in many cases to near the levels it was trading before the war in Iran started at the end of February. EURUSD, for example, has come full circle since late February, rallying Tuesday to just above 1.1800 on the intraday highs before easing back slightly.
GBPUSD and AUDUSD likewise rallied to levels not seen since before the start of the Iran war, with GBPUSD rallying as high as 1.3590 from 1.3506 on Monday’s close, while AUDUSD managed as high as 0.7144, now not far from its three-year high from earl March at 0.7187.
The Japanese yen continues to perform poorly despite falling yields and falling oil prices, perhaps as the market prefers to sell the currency in the crosses amidst widespread strength in global risk sentiment as carry traders build fresh positions. GBPJPY hit a cycle and multi-year high Tuesday, trading at its highest level since just before the global financial crisis began raging in 2008. EURJPY posted an all-time high Tuesday at 187.53 and remains pinned near that level in early Wednesday trading.
