Macro Update
Oil surge: Brent climbed to around $106 and WTI to $96, posting weekly gains of 17.1% and 15.1% respectively, marking the second-largest increase since the conflict began.
Hormuz disruption: Iran’s actions in the Strait of Hormuz and continued shipping constraints are threatening roughly 20% of global oil and LNG supply, maintaining a significant risk premium in prices.
Escalation fears: Renewed military tensions, including Iranian naval activity and air defence engagement, alongside stalled US-Iran talks, have heightened the risk of further conflict.
Fragile ceasefire: Markets remain sceptical about de-escalation despite a three-week extension to the Israel-Lebanon ceasefire, with the broader Iran conflict still unresolved.
Mixed equities: Asia-Pacific indices traded unevenly amid uncertainty, while US futures edged higher and European futures pointed lower in a volatile sentiment backdrop.
FX and policy focus: The dollar strengthened on safe-haven demand, the yen weakened towards 160 per dollar with intervention risks increasing, and attention shifts to upcoming central bank decisions from the Fed, ECB and Bank of England.
Dow Jones rally stalls
The Dow Jones Industrial Average’s sharp rally off its late March low has so far taken it to this week’s 49,848 high below which the index short-term consolidates.
If overcome, the way would open for the February peak at 50,512 to be reached.
A slip through Thursday’s 48,861 low may close the price gap with its 16 April high at 48,683.
Short-term outlook: bullish while above the 23 April 48,861 low
Medium-term outlook: bullish while above the 13 April 47,506 low