Market drivers and catalysts
Equities: U.S. stocks ended mixed, Europe declined on geopolitical tension, while Asia rebounded strongly as ceasefire optimism lifted sentiment
Volatility: Ceasefire relief, oil drop, VIX elevated, short-term vol high, upside skew, headline sensitivity
Digital Assets: Crypto follows risk-on, BTC ~$72k, ETF outflows
Fixed Income: Global bond yields pushed sharply lower as inflation fears ease on Iran war ceasefire hopes
Currencies: Iran war ceasefire hopes drive USD sharply lower
Commodities: Crude and fuels slump; metals rally on ceasefire hopes
Macro events: US FOMC Minutes, US Treasury to auction 10-year notes
Macro headlines
Trump and Iran agreed to a two-week ceasefire less than two hours before a deadline to “wipe out” Iran’s civilization, contingent on Iran reopening the Strait of Hormuz, a route for about one-fifth of the world’s oil.
Trump said Iran sent a 10-point proposal as a “workable basis” for talks to be finalized within two weeks. Iran agreed to reopen the Strait of Hormuz for that period if attacks stop and transit is coordinated with its Armed Forces, and Israel has reportedly joined the ceasefire.
Median year-ahead inflation expectations rose to 3.4% in March 2026 from 3%, driven by higher expected gasoline (9.4%), food (6%), and rent (7.1%) prices. Three-year expectations ticked up to 3.1%, five-year stayed at 3%, and while spending and income views were steady, consumers grew more pessimistic about future finances.
The Economic Optimism Index fell to 42.8 in April 2026 from 47.5, its lowest since June 2024 and eighth month below 50, as Middle East tensions and higher gas prices hurt sentiment. The Six-Month Outlook dropped to 38.5, Personal Financial Outlook to 50.2, and confidence in Federal Economic Policies to 39.8, signaling rising skepticism about the government’s economic management.
Macro calendar highlights (times in GMT)
0600 – Germany Feb. Factory Orders
0730 – Germany Mar. Construction PMI
0900 – Eurozone Feb. Retail Sales
0900 – Eurozone Feb. PPI
1100 – US Apr. MBA Mortgage Applications
1430 – EIA's Weekly Crude and Fuel Stocks Report
1700 – US Treasury to auction 10-year notes
1800 – Fed minutes from 18 March Meeting
1930 – Trump to meet with NATO Secretary-General
Earnings this week
Today: Wednesday: Delta Airlines, Constellation Brands
Thu: Thursday: Fast Retailing
For all macro, earnings, and dividend events check Saxo’s calendar.
Equities
USA: The S&P 500 rose 0.1% to 6,616.85 and the Nasdaq 100 was little changed, while the Dow Jones Industrial Average fell 0.2% to 46,584.46 as markets stabilised after earlier losses tied to Iran-related uncertainty. Communication services outperformed, with Alphabet gaining 1.8% on its AI chip partnership with Broadcom, while Apple fell around 3.0% on concerns over delays to its foldable device. Healthcare provided support, with major insurers moving higher after favourable policy updates. Energy names lagged as oil prices reversed sharply. Investors now look ahead to inflation data for confirmation that easing energy prices may reduce pressure on rates.
Europe: European equities declined, with the STOXX 600 falling 1.0% to 590.59, the DAX losing 1.1% to 22,921.59, and the FTSE 100 down 0.8% to 10,348.79 as investors reduced risk ahead of the Iran deadline. Losses were broad-based, with ASML dropping 4.1% on renewed concerns over potential U.S. export restrictions to China, while Leonardo fell 8.1% amid uncertainty around leadership changes. AstraZeneca declined 2.3%, weighing on the FTSE 100, while cyclicals and industrials also came under pressure. The session reflected defensive positioning, with markets now focused on whether geopolitical tensions ease further following ceasefire signals.
Asia: Asian markets closed higher, led by strong gains in Japan and South Korea as investors reacted to easing geopolitical risks. Japan’s Nikkei 225 rose 4.1% to 55,618.89, while the Topix gained 3.0%, supported by strength in chip and metals stocks. Advantest surged 8.8% on semiconductor demand optimism, while Furukawa Electric jumped 14.0% following an upgrade. South Korea’s KOSPI rallied 6.2% to 5,837.30, triggering trading curbs as buying accelerated. Australia’s S&P/ASX 200 rose 2.9%, though energy stocks declined sharply as oil prices fell. Markets now look for confirmation that the ceasefire holds to sustain the rebound.
Volatility
Volatility should ease today after the U.S.–Iran two-week ceasefire triggered a sharp drop in oil and a broad relief rally across risk assets. The recent spike in volatility was largely driven by fears of an energy shock feeding into inflation, so the reopening of the Strait of Hormuz and oil falling back below $100 removes part of that immediate pressure. Still, markets were clearly on edge into yesterday’s close, with the VIX at 25.78 and very short-term measures even higher, showing that uncertainty remains elevated. This suggests today’s calm is likely conditional on headlines rather than a full reset.
For the S&P 500, options pricing implies an expected move of about 145 points (2.19%) for this week. For today’s expiry, the expected move is around 96 points (1.45%), and the options skew leaned slightly toward upside calls over puts near the money, pointing to positioning for a relief bounce rather than fresh downside hedging.
Digital Assets
Digital assets are moving back in line with the broader risk-on mood, supported by easing geopolitical tensions. Bitcoin is holding around $71,700 and Ethereum near $2,240, stabilising after a strong rebound following the ceasefire announcement. The move is visible across the market, with XRP around $1.38 and Solana near $84, although some altcoins are modestly softer this morning.
- The ETF picture has turned more mixed: earlier in the week saw strong inflows, but the latest data points to net outflows of roughly $159 million from spot Bitcoin ETFs, suggesting some profit-taking into strength. IBIT and ETHA are both slightly lower on the day, reflecting that shift in sentiment.
For investors, the key takeaway is that crypto continues to behave as a macro-driven asset: it responds quickly to improving risk sentiment, but the durability of the move will depend on whether geopolitical stability holds and whether institutional flows remain supportive.
Fixed Income
Global bonds rallied steeply on the hopes that a US-Iran ceasefire would continue to push energy prices lower. The benchmark US two-year treasury yields fell more than six basis points to 3.72% early Wednesday from late Tuesday levels, a three-week low. At the longer end of the curve, the benchmark 10-year treasury yield fell more than five basis points to 4.24%
Japan’s yields curve flattened as short yields remained pinned only slightly below the cycle highs on the huge move lower in crude oil on US-Iran ceasefire hopes, but longer yields came under more pressure, with the benchmark 10-year JGB yield more than four basis points lower at 2.37% Wednesday after the multi-decade highs intraday on Tuesday. The benchmark 30-year JGB yield plunged more than 16 basis points to 3.60%.
Commodities
Crude prices slipped back below USD 100 after the US and Iran agreed to a two-week ceasefire, with Tehran reopening the Strait of Hormuz conditional on no further attacks from US or Israeli forces. While significant uncertainty remains, the reopening may mark the beginning of a de-escalation following a conflict that severely disrupted supplies of crude, refined fuels, fertilizers and key industrial metals. More than 800 vessels remain stranded in the Persian Gulf, and shipowners are likely to seek firm security assurances before both exiting and, importantly, re-entering with empty vessels for loading.
Despite the easing in headline prices, near-term supply tightness persists. Delivery timelines—from loading to final discharge—mean prompt availability is likely to remain constrained for several weeks. Notably, Dated Brent traded at USD 144 per barrel on Tuesday. If the ceasefire holds, a return to ‘normal’ could still take months given the time it takes to reopen shuttered wells, and before crews and vessels are in the right places, and refineries are fully repaired and restocked.
Across metals, prices moved higher as the dollar softened and bond yields declined. Precious metals, led by gold and silver, found support in expectations that easing inflation pressures could reopen the path for rate cuts. Industrial metals also advanced, with lower energy prices helping to alleviate recession concerns and improve the demand outlook.
Currencies
- The US dollar sold off sharply on hopes that a US-Iran ceasefire deal is in place for at least the next two weeks. EURUSD traded up just above 1.1700 early Wednesday, up from a close below 1.1600 on Tuesday, while USDJPY pushed below 158.25 after trading north of 159.70. The strongest currencies were the smaller G10 and EM currencies, with AUDUSD lifting to 0.7075 Wednesday, one hundred pips from its close Tuesday.
The Swedish krone was particularly strong, lifting versus the Norwegian krone as oil prices were crushed. EURSEK reversed below 10.90 after a spike above 11.05 on Tuesday
The New Zealand dollar firmed as the Reserve Bank of New Zealand’s monetary policy statement was seen as a “hawkish hold” as the bank sees inflation rising above its target zone for the remainder of 2026 and Governor Breman said the committee had discussed a “relatively early” rate hike. AUDNZD traded down to 1.2120 from a cycle- high above 1.2200 shortly after the meeting.
