Where Friday’s reports that Iran would fully reopen the Strait of Hormuz to shipping triggered a wave of relief and a rally across financial markets, tensions returned within 24 hours. According to reports, Iran fired on vessels over the weekend, while the United States detained a ship sailing under the Iranian flag. In addition, no talks took place between Iran and the US over the weekend. Iran indicated it was not inclined to negotiate for the time being, even though the ceasefire period expires tomorrow. This makes for an uneasy start to the new week.
"}},{"componentType":"sectionTitle","title":"Energy prices climb once more"},{"componentType":"paragraph","richBody":{"value":"Oil and gas prices rise this morning by between 5% and 7%, undoing part of Friday’s steep sell-off. On Friday, the price of a barrel of Brent crude fell by 9% to just above $90 on hopes of a swift end to the conflict. This morning, oil is again trading above $95 per barrel. A quick resolution still appears unlikely, keeping energy prices elevated and market volatility high. Against this backdrop of rising uncertainty, the dollar strengthens this morning to 1.175 against the euro, after weakening to 1.184 on Friday afternoon.
"}},{"componentType":"sectionTitle","title":"Asian markets remain resilient"},{"componentType":"paragraph","richBody":{"value":"Despite ongoing uncertainty surrounding the conflict in the Middle East and higher oil prices, most Asian equity markets are trading higher this morning. Investors appear encouraged by the record levels reached on Wall Street on Friday and are, for now, treating developments around Iran and the Strait of Hormuz as background noise. While this is a comforting narrative, it remains to be seen how long such resilience can last if energy prices stay structurally high.
At the time of writing, the Nikkei index is up 0.8%, while the Hang Seng index gains a similar 0.8% and the CSI 300 index rises by 0.6%. Technology stocks are also in demand. Taiwan’s stock market is up around 1%, and South Korea’s Kospi index is gaining just over 1%. Asian investors appear, for now, to be looking past the latest regional developments.
"}},{"componentType":"sectionTitle","title":"Relief on European markets proves fleeting"},{"componentType":"paragraph","richBody":{"value":"On Friday afternoon, sentiment on European stock markets briefly surged following comments by Iranian Foreign Minister Abbas Araghchi, who stated that the Strait of Hormuz would again be open for shipping. Energy prices and bond yields fell in response, the dollar weakened, and equity markets jumped. Shares in oil companies moved sharply lower, losing an average of 5.6%. Even so, the Stoxx Europe 600 index closed the day 1.6% higher, led by the consumer discretionary sector, which rose 3.5%. This sector had been among those hit hardest by the conflict.
Not all stocks shared in the upbeat mood. Shares in French rail and train manufacturer Alstom fell 27% after disappointing quarterly results and a bleak outlook.
"}},{"componentType":"sectionTitle","title":"Lower yields offer temporary respite"},{"componentType":"paragraph","richBody":{"value":"Yields on euro area government bonds fell broadly on Friday, helped by lower energy prices. Cheaper fuel reduces inflationary pressure. The German two-year yield declined by 11 basis points to 2.41%, reflecting hopes that the European Central Bank (ECB) may not need to raise rates much further. The ten-year yield fell by 7 basis points to 2.96%. Given the renewed rise in oil prices, a partial rebound in yields today would not be surprising.
"}},{"componentType":"sectionTitle","title":"Wall Street extends its records"},{"componentType":"paragraph","richBody":{"value":"Hopes for an end to the conflict and falling fuel prices fuelled a euphoric mood on Wall Street on Friday. The S&P 500 index gained 1.2% to close at a new record, while the Nasdaq advanced 1.5% to a fresh record high. The Dow Jones Industrial Average rose by 1.8%. Technology stocks within the Nasdaq 100 index climbed for the thirteenth consecutive session, the longest such winning streak since 2013.
Not all companies benefited from the positive sentiment. Netflix slid nearly 10% after posting disappointing quarterly results and issuing a weaker-than-expected outlook for the second quarter. In bond markets, the US two-year yield fell by 7 basis points to 3.71%, while the ten-year yield declined by 6 basis points to 4.25%. This morning, the ten-year yield edges higher again to around 4.27%, partly reflecting firmer oil prices.
"}},{"componentType":"sectionTitle","title":"Lower openings expected"},{"componentType":"paragraph","richBody":{"value":"US equity futures are currently trading around 0.7% lower, pointing to a weaker start for Wall Street at the beginning of the new trading week. European stock markets are expected to open around 1.3% lower. Part of Friday’s gains is likely to be reversed as oil and gas prices rise again. Market volatility is expected to remain elevated for as long as there is no clear and lasting resolution to the conflict with Iran and uncertainty persists over the flow of oil and gas through the Strait of Hormuz.
"}},{"componentType":"sectionTitle","title":"Today’s agenda"},{"componentType":"paragraph","richBody":{"value":"On today’s economic calendar are producer price inflation figures from Germany and data on construction spending in the euro area. These releases are unlikely to move markets significantly. For now, news from the Middle East remains the dominant driver of market sentiment.
The corporate earnings season gradually gathers pace this week. Today remains relatively quiet, with results expected from, among others, Plus500 and Steel Dynamics.
"}},{"componentType":"sectionTitle"},{"componentType":"paragraph","richBody":{"value":""}},{"componentType":"sectionTitle"},{"componentType":"paragraph","richBody":{"value":""}},{"componentType":"linkList","iconTitle":{"title":"Read More"},"textLinks":[{"url":"/en/personal/investing/market-news-and-views/investment-outlook-2026-home","text":"2026 Investment Outlook"},{"url":"/en/personal/investing/market-news-and-views/market-outlook","text":"Market Outlook"},{"url":"/en/personal/investing/market-news-and-views/number-of-the-week-overview","text":"Number of the Week"},{"url":"/en/personal/investing/market-news-and-views","text":"More News and Views"}]},{"componentType":"sectionTitle","title":"Good to know"},{"componentType":"paragraph","richBody":{"value":"Investing involves risks and costs. The value of your investment may fluctuate. Past performance is no guarantee of future results. Read more about the risks of investing.
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