HL LIVE
HL commentary as it happens
Monday 30th March
Oil ticks higher as de-escalation doubts mount
Oil prices jumped about 3% to start the week, with crude holding at its highest level since mid-2022 amid the Iran conflict. Doubts over a quick resolution have grown after Iran‑backed Houthi militants stepped up attacks in the region, and the US moved additional troops closer to the conflict. With the Houthis threatening Red Sea shipping lanes and key energy infrastructure, and rumours that Washington is preparing for ground operations, traders are bracing for more supply risk and further price volatility.
US markets brace for a string of economic data points
US markets remain under pressure, with the S&P 500 now 9% below its January peak as investors brace for a heavy week of data. The spotlight will fall on Friday's March jobs report, where payrolls are expected to rebound after February's surprise drop. A busy calendar also brings the ISM Manufacturing PMI, retail sales, JOLTs job openings, and the monthly trade balance, all of which will help shape views on the strength of the economy.
UK markets battle with rate hike expectations
UK stocks look set for a choppy start, as the FTSE 100 opens slightly higher this morning. With only a light run of company updates ahead, geopolitics is likely to be the main driver of sentiment. Investors are also adjusting to a backdrop where interest rate expectations have shifted, with markets now firmly pricing in rate hikes this year – though we know how quickly these odds can shift.
Volatile week ahead as Vix reaches tariff tantrum levels
Global markets are heading into the week on edge as the Iran conflict continues to cast a long shadow. Fresh worries that troops could be drawn further into the conflict are keeping volatility elevated and confidence fragile. With the volatility index (Vix) closing last week at 31, its highest level since last April's tariff tantrum, investors should be prepared for another turbulent week.
Friday 27th March
US market sell-off showcases the benefits of diversification
US markets had a tough day at the office, though futures hint at a modest clawback later today - as ever, though, we know sentiment can shift quickly before the opening bell. It did, however, serve as a useful reminder of why diversification matters. While tech stocks took a hefty tumble, the equal‑weighted S&P 500 quietly finished the session broadly flat, suggesting the pain wasn’t as broad‑based beneath the surface. Social media names were firmly in the firing line as investors digested a run of jury verdicts linked to mental health and child safety concerns. Both are hugely important issues with clear work still to be done, but yesterday’s narrative that this represents a “Big Tobacco moment” for the sector feels a little overdone.
UK markets react to retail sales and consumer confidence data
Fresh retail sales data showed volumes slipped 0.4% month‑on‑month in February, a smaller fall than expected, meaning activity has, for now at least, held on to much of its early‑year momentum. But weakening consumer confidence is likely the more telling signal, with the GfK reading dropping to an 11‑month low in March as households grapple with the twin threat of higher inflation and softer growth prospects. Markets are currently pricing around a 70% chance of a rate hike in April, but with sentiment already starting to wobble and growing risks to the growth outlook, a pause from the Bank of England could be the more measured prediction.
Higher bond yields put pressure on finding a swift resolution in Iran
Government bond markets weakened through the session yesterday. Normally, when equity markets wobble, you’d expect bonds to act as a buffer as investors seek safety, but yields pushed higher as markets continued to price in inflation and interest rates staying higher for longer. We know the White House keeps a close eye on the bond market, so pressure will be mounting to secure a deal in the Middle East sooner rather than later.
Thursday 26th March
US natural gas storage figures later. Year-to-date prices -6.5% vs +90% for EU contracts.
Brent Crude is pushing on $105 this morning after bottoming out at nearly $97 in yesterday’s session as traders try to second guess the path of the Iran War.
US markets: Initial jobless claims in focus, 211k expected
US stock futures are also trading down this morning after yesterday’s broad-based gains. Outside of the geopolitical stage, weekly jobless figures will be a key datapoint for today, with new benefit claimants expected to rise slightly from last week’s 205k to 211k, still relatively low by historical standards. In recent times, weaker-than-expected labour market numbers have been seen as potential catalysts for rate cuts and greeted favourably by stock markets. However, in the current climate, signs that higher fuel prices and the fear factor are dragging on economic activity could be a negative for equities. Speeches by Fed Vice Chair Barr and Governors Cook and Jefferson are also lined up for today, giving further clues around the outlook for the economy and monetary policy.
Gold slides below $4,500
Gold has fallen back below $4,500 per ounce, around $1,000 lower than the peaks seen at the end of January. Interest rate expectations, rather than safe-haven appeal, have been in the driving seat. The inflationary impact of the oil market dislocation has increased the probability of a Fed rate hold until at least October from around 11% to 62% over the last month. Markets now see a 38% chance of at least a quarter-point rise, and when it comes to the possibility of a cut, all bets are off. Things could change quickly if Middle Eastern tensions simmer down, but the longer oil routes remain blocked, the more embedded hawkish forecasts will become.
FTSE 100 dips after two days of gains
After two days of gains, the FTSE 100 has given back a little this morning as investors seek out concrete signs of progress towards a peace deal between Washington and Iran and the resumption of oil and gas transit through the Strait of Hormuz. So far, the main communication channels appear to be traditional and social media, as well as third-party states. It may take a formal agreement or at least a move to the negotiating table to steady markets further. While the bears may have the edge this morning, there could be bulls waiting in the wings if moves towards a resolution gather pace.
Wednesday 25th March
Oil pulls back but still remains at elevated levels
Oil remains as volatile as ever, pulling back on hopes of de‑escalation in the Middle East, but prices are still sitting at seriously elevated levels. Social media posts and press conferences can only go so far, and it will likely take a full reopening of the Strait of Hormuz to drive any meaningful and sustained move lower from here.
US markets slid last night, but futures look more positive
The S&P 500 slipped 0.4% last night, but there’s a brighter tone this morning with futures edging higher as oil prices fall on hopes the White House can bring the Middle East conflict to an end. Under the surface, Tech told a more mixed story, with software stocks once again lagging behind the rest of the pack. Meanwhile, companies building the nuts and bolts of AI, like hardware and equipment firms, held up much better. It might be too early to call it a turning point, but the return of familiar trading patterns could be a very early indicator that the market is starting to think about life beyond the Middle East conflict.
UK markets react to inflation data, probability of rate hikes moves to 99%
UK markets have opened higher off the back of easing Middle East tensions, with investors taking a measured view of this morning’s inflation print. CPI held steady at 3.0% in February, right in line with expectations, but this is before the latest surge in energy prices feeds through. A pick-up in core inflation to 3.2%, alongside still-sticky services inflation, shows underlying price pressures haven’t gone away, but falling fuel and food costs offered some welcome offset for now. Looking ahead, the real story for UK markets will be what comes next, with elevated oil and gas prices expected to push inflation higher by the end of the year. The market is all but certain that the Bank of England will hike rates this year, with the implied probability now at 99%, but we know how quickly these odds can shift, and we don’t think it's quite as clear-cut.
Global equity markets move higher on signs of de-escalation
Global equity markets are pointing higher this morning after optimism grew around a potential resolution to the Middle East conflict, following reports that the US is pursuing talks with Iran. Reports suggest that Washington has sent Tehran a 15-point proposal aimed at resolving tensions, while Israeli media indicate that the US is pushing for a one-month ceasefire to allow negotiations to take place. Oil prices have moved lower on the developments, offering some relief to equities that had been weighed down by worries over inflation and the knock-on impact for interest rates. It’s still a highly fluid situation, trying to call how the rest of the week plays out would be unwise, but there are now clearer signs that we are on a path toward de‑escalation.
Tuesday 24th March
Gilt yields started Monday at GFC highs, but fell through the day – lower UK inflation due tomorrow expected to dampen yields further
Gilt yields started the week at highs not seen since the global financial crisis – such was the fear induced by the incendiary language over the weekend but similarly fell to end the day down. The 10-year peaked above 5% before falling to 4.86%. UK inflation, due tomorrow, is expected to fall to 2.8% in February from 3% the previous month which could dampen yields further.
Iran denied talks have begun, causing whipsaw in markets
Announcing plans to extend the previous 48-hour deadline to open the Strait of Hormuz, or else, by five days, he sent a clear signal to the market that the US is ready to make a deal. Just a couple of days earlier, Trump had outlined plans to target Iran’s power plants, and Iran in turn had threatened energy and water infrastructure across the Middle East.
Opponents are calling it another TACO – Trump Always Chickens Out – trade, supporters hailing another example of the Art of the Deal, but either way equity markets rallied in inverse response to falling oil, with the S&P 500 up 1.15%, the NASDAQ up 1.38%. Intra-day trading saw markets at even higher levels, as the peace talk optimism boosted stocks and bonds. Yields on Treasury bills – US government debt – whipsawed through the day, as market expectations swung from escalation to resolution. Ending the day with 10-year T-bill yielding 4.36%, down from highs of 4.45%.
Today, Asian markets are continuing the positive momentum seen overnight in the US, with most markets in the green. The Nikkei 500 is up 1.37% in Japan, China indexes in Shanghai and Hong Kong are up 1.5% and 2% a piece. Futures for the UK and Europe are more cautious however, indicating the FTSE 100 will open marginally down and the Euro Stoxx and DAX,reversing their respective rallies of yesterday, look set to open down, too.
Brent initially fell below $100 as President Trump delays targeting Iran’s power supply in favour of truce talks
According to President Donald Trump, preliminary truce talks have begun with Iran. According to Iran, he’s living in la-la-land and the talks never happened. But the markets love hope, and the prospect of a ceasefire was enough to push brent crude oil down 11% yesterday to below $100 a barrel for the first time in weeks. But the Iran denial, and a report that the UAE and Saudi Arabia are considering entering the war, has sent oil back up to $103. It’s foreign-policy-by-soundbite, but it is President Trump’s speciality.