HL commentary as it happens

Bull run sense check – tech multiples still reasonable

AI infrastructure companies have been a core driver of an incredible first-quarter earnings season for US stocks and can take much of the credit for the strong performance of the leading indices. With forward earnings multiples of the tech-led NASDAQ composite barely above the 10-year average, however, it feels like the bulls could still have further to run yet.

US futures stable after record-close on Wall Street

US stock futures have moved tentatively upwards after both the S&P 500 and NASDAQ touched new high-water marks on Thursday. Softer than expected core inflation (PCE) data for April (0.24% month-on-month) and an encouraging 0.11% in real personal consumption helped add a touch of confidence to market expectations that US base rates will remain stable for the rest of the year. According to CME’s FedWatch, the probability of a quarter-point rise fell from 38.3% to 37.1%.

Brent crude at $92, 20% below the 2026 peak

The FTSE 100 is little moved this morning, failing to catch a breeze from Wall Street’s record close on Thursday. The resumption of airstrikes between the US and Iran weighed on the London index yesterday, but a reported 60-day extension to the fragile ceasefire and a possible agreement to reach an agreement seems to have settled nerves today.

What all that actually means is anybody’s guess, but oil traders are taking an optimistic view that the end could be in sight for disruption in the region, and Brent Crude oil prices have taken another step down to under $92 per barrel, around 20% off the peaks seen earlier in the month.

Oil ticks higher on fresh uncertainty

Oil prices hovering in the low to mid $90’s per barrel show there is still a clear risk premium attached to the conflict, especially while shipping through the Strait and Iran’s nuclear programme remain unresolved sticking points. But the bigger picture is that crude is still on course for a second weekly decline, suggesting investors are not yet pricing in a worst-case disruption. For now, the market looks caught between short-term nerves over renewed hostilities and a lingering hope that both sides still have enough incentive to get energy flows moving.

Equity markets set to move lower at the open

Global equity markets are set for a softer open, with FTSE 100 opening down, and similar pressure showing across US futures and much of Europe. The issue for investors is that markets have started to price in the Middle East conflict being largely contained, which means positive headlines now have less power to lift sentiment, while any setback can quickly take the shine off. Hopes yesterday around the reopening of the Strait of Hormuz offered some relief, but renewed hostilities and fresh uncertainty over key sticking points, including shipping traffic and the nuclear programme, have brought caution back to the fore. That leaves markets in a fragile mood this morning.

Oil price steady but inflation worrying the European Central Bank

Oil prices are holding around $97 a barrel. Tanker traffic through the Strait of Hormuz continues, with vessels reportedly moving in small groups through a diplomatically sensitive corridor. While flows remain uninterrupted for now, the situation remains fragile.

UK gilt yields have eased in recent days, with the 10-year falling back below 4.9% from recent highs of near 5.17%. In Europe, the tone is turning more hawkish. Some European Central Bank members have indicated a rate rise as soon as June may be needed, signalling they can no longer look through persistent inflation pressures. Markets are now pricing in two further increases this year in Europe."