Investor optimism remains supported by signals of a possible de-escalation in the Middle East

On Tuesday, the US stock markets ended with a powerful rally. By the end of the day, the Dow Jones Index (US30) rose by 0.48%. The S&P 500 Index (US500) gained 0.72%. The Technology Index NASDAQ (US100) closed higher by 1.16%. Investor optimism at the beginning of April was fueled by signals of a possible de-escalation in the Middle East. Statements by Donald Trump that Iran had officially requested a ceasefire, and his readiness to withdraw troops within several weeks, provided the security of the Strait of Hormuz is ensured, became the key catalyst for the rally. This led to a sharp reduction of the geopolitical premium in oil prices, easing pressure on capital markets. However, the overall positive picture was overshadowed by a 15.6% drop in Nike shares – investors reacted extremely negatively to the company’s weak revenue guidance, which raised concerns about the sustainability of consumer demand in the retail sector.

The CAD strengthened to 1.39 per US dollar. The country’s manufacturing sector showed stagnation in March: the PMI fell to the critical level of 50.0. Zero growth is accompanied by a sharp increase in production costs and growing anxiety among Canadian manufacturers regarding possible trade tariffs from the United States. Such uncertainty in trade policy limits the recovery potential of the Canadian currency, despite the temporary calm in the Persian Gulf.

The Mexican peso showed a confident recovery, reaching 17.8 per US dollar. The main driver of growth was the return of global risk appetite amid signals of a possible de-escalation in the Middle East. After an extremely volatile March, when the currency suffered from massive unwinding of carry-trade positions and investor flight into safe-haven assets, the weakening of the US dollar allowed the peso to recoup a significant portion of its losses.

On Thursday, Bitcoin fell by about 2.0%, settling at 66,512 dollars. The digital assets market reacted to the emergency address of US President Donald Trump to the nation, in which he summarized the interim results of “Operation Epic Fury.” Despite the overall rhetoric about the mission nearing completion, Trump threatened Iran with an “extremely strong strike” in the next two to three weeks if Tehran does not comply with Washington’s conditions.
European stock markets showed a sharp rise yesterday. Germany’s DAX (DE40) rose by 2.73%, France’s CAC 40 (FR40) closed up 2.10%, Spain’s IBEX 35 (ES35) gained 3.11%, and the UK’s FTSE 100 (UK100) closed 1.85% higher.

On Wednesday, the US WTI crude oil futures ended trading at 99.60 dollars per barrel, recording a long-awaited drop below the psychological threshold of 100 dollars. Early April was marked by a wave of cautious optimism following Donald Trump’s statements about a possible end to the military operation in Iran within two to three weeks. The market reacted sensitively to news that Iranian leader Masoud Pezeshkian had officially requested a ceasefire, giving investors hope for de-escalation of the most acute energy crisis in recent years. Despite diplomatic glimmers, the US administration maintains a tough stance, setting an uncompromising condition: any peace talks will begin only after the Strait of Hormuz is fully open and recognized as safe for international shipping. This strategic waterway remains the main point of tension, as its blockade led to a record volume of oil fund trading at the end of March.

Asian markets rose yesterday. Japan’s Nikkei 225 (JP225) climbed 1.85%, China’s FTSE China A50 (CHA50) gained 1.50%, Hong Kong’s Hang Seng (HK50) rose 2.04%, and Australia’s ASX 200 (AU200) showed a positive result of 2.24%.

The NZD resumed its decline, falling to 0.571 US dollars and interrupting a two-day recovery. The main pressure factor was investor disappointment after Donald Trump’s prime-time address to the nation. Despite statements that the goals of “Operation Epic Fury” are almost achieved, the US President did not present a concrete plan for an immediate ceasefire. Although the RBNZ traditionally tries to “ignore” temporary price spikes, Breman made it clear that if inflation becomes persistent, the bank will have to raise interest rates again to prevent inflation expectations from rising.