HL commentary as it happens

Treasury yields dips and gold rises

This wave of optimism has been enough to carry US stocks to fresh highs as the S&P 500 crosses 7,100 for the first time. The potential for a less severe inflationary oil shock has also seen 10-year Treasury bond yields fall nearly 8 basis points to 4.23%, with gold heading back up towards $4,900 per oz as interest rate expectations moderate. As of yesterday, Fed Fund Futures were pricing in just a 26% chance of a further quarter point cut in US rates this year, but in the space of 24 hours that’s now moved to 38%. Markets will want to see decisive action towards a durable peace if this shift is to be anything more than temporary.

Oil prices fall 12%

Markets have responded enthusiastically to this latest step change in co-operation, which has sent the price of Brent crude oil down by 12% to around $87, its lowest level in 6 weeks. That’s also driven some steep falls in oil stocks – which has kept the overall rally in the FTSE index limited to under 1% given the relatively high oil sector weight.

Iran declares open passage to commercial passage for remainder of ceasefire

President Trump’s social media post celebrating the re-opening of the Strait of Hormuz has been confirmed by Iran’s foreign minister Seyed Abbas Aragchi. However, risks remain that things could flare up again. The US intends to maintain its blockade on Iranian ports until a final deal’s been agreed. And Iran’s pledge only extends to the end of the current ceasefire, which expires on 22 April.

Outlook for Fed rates remains murky

The US domestic economy is also showing signs of resilience, with this week’s initial jobless claims falling to 207,000 and undershooting forecasts of 215,000. The economic resilience and inflationary impact of higher energy prices mean that imminent interest rate cuts by the Federal Reserve are no longer on the table. Looking to the end of the year, no change is still the most likely outcome being priced in by markets. Nonetheless, the last week has seen the probability of a quarter point cut by Christmas shift from 21% to 26%. Any further gain in confidence towards the resumption of the easing cycle would provide a further tailwind for equities. However, with geopolitical uncertainty running high investors would be wise to remain diversified across sectors and asset classes.

Brent Crude dips but Strait of Hormuz remains closed

For the oil market, the continued closure of the Strait of Hormuz remains the focus, and Brent Crude prices this morning have fallen only slightly to $98, reflecting the scale of the task required to find a lasting resolution. All eyes now turn to Paris, where Keir Starmer and Emmanuel Macron are hosting a summit of global leaders to facilitate the ‘immediate reopening of the strait.’

More peace talks possible after ceasefire on Israel’s northern border

Events in the Middle East remain the key market driver, and President Trump's overnight comments on the potential for further peace talks between the US and Iran could boost equity markets today. A ceasefire between Israel and Iranian proxy Hezbollah after Israeli/Lebanese talks in Washington provides further hope for de-escalation.

UK GDP bounced in February, but growth is expected to slow

UK GDP delivered a stronger-than-expected bounce in February, rising by 0.5% on the month and suggesting the UK economy entered the year with more momentum than many had assumed. But forward-looking activity surveys for March point to the conflict with Iran already taking the wind out of that growth as higher energy costs begin to feed through. Growth will likely slow from here as conditions become more challenging, which is one of the reasons we expect the Bank of England to hold rates steady amid volatile energy prices rather than implement hikes.

Oil stays above $90 as Hormuz risk remains

Oil prices remain elevated above $90 a barrel after a volatile start to the week, as investors look towards a possible extension of the ceasefire between the US and Iran while weighing the chances of a broader agreement that could ultimately reopen the Strait of Hormuz. Reports suggest the US and Iran are considering extending their two-week truce to allow more time to negotiate a lasting peace deal. For now, markets appear willing to look past higher oil prices, but reopening the Strait is key to sustaining this broader risk-on appetite. In the meantime, the flow of oil and gas is still effectively cut off, paving the way for more volatility ahead.

Markets snap back with FTSE 100 and S&P 500 up on the year

Global markets have staged one of the fastest recoveries in recent memory, with both the FTSE 100 and S&P 500 now back in positive territory for the year after a bruising start to 2026. The S&P 500 closed at a fresh all-time high yesterday, a powerful reminder of just how quickly sentiment can turn once the outlook begins to stabilise. It reinforces a simple yet often-overlooked truth: trying to perfectly time the bottom is exceptionally difficult, even for seasoned investors. In periods of heightened volatility, as we have seen recently, the best course of action is often to stay invested and avoid trying to time the peaks and troughs.

IMF downgrades growth forecast for UK because of conflict but keeps in place global forecast for 2027

The macro data flow is negative this week – with the International Monetary Fund (IMF) estimating that the war will hamper global growth by 0.2 percentage points this year, forecasting expansion of 3.1%. The UK is set to feel the brunt of the disruption with growth predicted at 0.8% for this year, downgraded from 1.3% in the January forecast. The IMF kept in place its forecast for 2027 however, suggesting resilience to the current headwinds.

The IMF shares our base case that the war does not escalate from here, nor become increasing protracted, disrupting energy markets and supply chains into next year. We consider Trump has little appetite for the impact on US stock markets, bond markets and opinion polls – and this week’s ceasefire has brought welcome respite, however fragile. In the event that the extreme scenario does play out however, with oil at $125 a barrel into 2027, the IMF warned that inflation would be stoked and growth would weaken.

Ceasefire talks have quelled oil prices and supported stock markets despite mixed data

Our house view has remained throughout the war that the Bank of England will hold rates while Iran war is ongoing but is unlikely to hike. Comparisons with the Russia-Ukraine war – the impact on inflation in 2022 and associated rate hikes – are not comparing apples with apples. Interest rates were near zero when Russia invaded Ukraine, and sit above neutral rate today, providing buffer to the impact of elevated prices. Gilts, fixed-term cash, and actively managed bond funds look attractive in this environment.

Markets currently are looking through the war – with the S&P 500 back to pre-conflict levels after a strong session yesterday. Europe also had a strong day yesterday, which has meant some softness on the open today, a mix of some company specific news and market dynamics. The FTSE 100 has opened flat.

Where do markets go from here? Expect continued volatility, and the recent rally may be a good opportunity to take gains and rebalance where needed ahead of earnings season.

Brent Crude prices dip amid reports of further US-Iran negotiations

Brent Crude futures have dipped to around $99 per barrel, giving up some of Monday’s gains. This comes as reports surface that the US and Iran are considering further negotiations to secure a long-term ceasefire agreement before the current two-week truce expires. OPEC+ reported that largely as a result of the disruption in the Strait of Hormuz, the group’s output fell by around 7.9 million barrels per day in March.

US stock futures continue to gain ground.

US stock futures moved higher this morning as, despite the breakdown in US-Iran negotiations over the weekend, there seems to remain hope that a diplomatic solution remains on the table. While it’s been a tough start to the year for investors to stomach, the bigger picture needs to be kept in mind. The S&P 500 has staged a comeback since the outbreak of the war, rallying more than 8% and is now sitting in positive territory year-to-date.