Volatility enthusiasts certainly got their money's worth yesterday. The Brent spot price traded between USD 83.60 and USD 119.25. High to low: a difference of 42.6%. A chasm, though not unprecedented. Moves of more than 50% were recorded, for instance, during the completely wild session of April 2020, when prices briefly slipped into negative territory. Brent eventually ended the day just below USD 90, posting its first decline in eight sessions.
What happened? Donald Trump delivered several of his trademark punchlines, and they clearly had an effect. He said that the war with Iran is practically over, that the plan is ahead of schedule, and that the Strait of Hormuz will soon be secured both militarily, by the US Navy, and financially, through guarantees provided to maritime transport operators. He also sought to contrast what he described as a temporary rebound in oil prices with the long-term security that intervention in Iran will bring to the United States and the wider world.
Promises bind only those who believe them, and in this case financiers were listening very closely, as they were searching for anything to cling to. By the closing bell, the Dow Jones had gained 0.5%, the S&P 500 0.83%, and the Nasdaq 100 1.32%. That said, the rebound was a cautious one. It was driven primarily by large technology companies linked to artificial intelligence, notably Alphabet and semiconductor stocks, on the familiar bargain-hunting narrative. Add to this defensive buying in healthcare and a recovery in companies with high operational leverage to oil prices, such as cruise operators and airlines, and you have the day's bullish picture. Industrial and financial stocks, by contrast, did not meaningfully participate in the market reversal.
Trump's remarks, however, came too late in the day to spare Europe a third consecutive losing session, although final losses were contained compared with the slump seen at the opening, when oil prices were surging. The Stoxx Europe 600 is down 4.6% over the past week and 6.1% since the start of March. The S&P 500, by comparison, has slipped just 1.2% over the same periods, illustrating how the conflict in Iran is weighing far more heavily on this side of the Atlantic. First because Europe remains energy-vulnerable. Second because the Middle East is far from the United States. It may sound simplistic when written like that, but Americans are physically removed from this conflict, unlike Europeans. That distance also shapes financial sentiment.
The easing in oil prices therefore lifted equities on Wall Street while pushing US Treasury yields lower. The transmission mechanism is inflation. If the oil price spike proves short-lived, discussions around Federal Reserve rate cuts could quickly resume.
A layer of caution nonetheless persists, as illustrated by the behaviour of safe-haven assets such as gold, which moved higher. The renewed rise in oil prices this morning, with Brent up 3.7% to USD 93 at the time of writing, shows that investors are paying to see how events unfold, well aware that the situation remains explosive. The VIX volatility index tells the same story. It declined yesterday but remains around the 25-point mark, an unusually elevated risk zone. There will be little in the way of corporate results or economic data capable of diverting the market's attention from the oil price curve.
In Asia-Pacific, the rebound is taking hold. Japan is up 2.8%, while South Korea, which tends to experience everything more intensely, is surging 5.5% after falling 6% the previous day. India (+0.9%), Australia (+1.1%) and Taiwan (+2%) are also in positive territory, as is Hong Kong, where the Hang Seng is advancing 1.8%. Europe is set to open higher, with ground to make up relative to the United States following the divergence in closing levels yesterday.
Today's economic highlights:
On today's agenda: the BRC Retail Sales Monitor in the United Kingdom; NAB Business Confidence in Australia; balance of trade, imports, and exports in China; exports and balance of trade in Germany; balance of trade in France; in the United States, existing home sales and API crude oil stock change. See the full calendar here.
- GBP / USD: US$1.35
- Gold: US$5,174.92
- Crude Oil (BRENT): US$93.68
- United States 10 years: 4.11%
- BITCOIN: US$69,902.8
In corporate news:
- Aviva reported "reassuring, if not inspiring" FY25 results, with operating EPS and capital returns in line with guidance, and a projected FY25-28 EPS CAGR of 11%.
- Rio Tinto is in active negotiations with Mongolia to revise the terms of the $18 billion Oyu Tolgoi copper mine project, which has faced cost overruns and delays.
- Shell agreed to sell Jiffy Lube and Premium Velocity Auto to Monomoy Capital Partners for $1.3 billion, retaining its core lubricant brands in the U.S. and Canada.
- Hutchmed announced the withdrawal and recall of Tazverik in China, Hong Kong, and Macau following Ipsen's decision to pull the drug from the U.S. market due to safety concerns.
- Madison Air Solutions disclosed a revenue surge to $3.34 billion in 2025 as it filed paperwork for a U.S. IPO.
- EQT has mandated a bank for the potential sale of software publisher Suse for $6 billion, according to Reuters.
- Rolls-Royce and PGZ have signed a memorandum of understanding for joint projects involving MTU propulsion systems.
- Mercedes-Benz is reportedly in talks with China's Great Wall Motor to share its factory in South Africa, according to Bloomberg.
- Repsol launches a share buyback program worth up to €350 million.
- Barco to acquire Vervent Audio Holding.
- The Italian Sea Group files a lawsuit against former executives.
- Hewlett Packard Enterprise gains 1.7% after hours following its results.
- Amazon is holding a technical meeting following AI-related outages, reveals the FT.
- Oracle says its flagship Abilene site is on schedule, with 200 MW already operational.
- Nvidia plans to launch an open-source AI agent platform, according to Wired.
- Apple now produces 25% of its iPhones in India. In addition, the group is postponing the launch of its smart home display while it waits for its new AI, according to Bloomberg.
- Vertex achieves positive Phase III results for its treatment for nephropathy.
See more news from UK listed companies here
Analyst Recommendations:
- Admiral Group Plc: Mediobanca maintains its underperform recommendation and raises the target price from GBX 2856 to GBX 3115.
- Reckitt Benckiser Group Plc: Berenberg maintains its hold recommendation and reduces the target price from GBX 5647 to GBX 5479.
- Clarkson Plc: Berenberg maintains its buy recommendation and raises the target price from GBX 4750 to GBX 5250.
- Standard Life Plc: Oddo BHF maintains its neutral recommendation and raises the target price from GBP 6.72 to GBP 7.
- Greggs Plc: RBC Capital maintains its outperform recommendation and reduces the target price from GBX 1970 to GBX 1830.
- Prudential Plc: Barclays maintains its overweight recommendation and raises the target price from GBP 13.20 to GBP 13.30.
- Admiral Group Plc: UBS upgrades to buy from neutral with a price target raised from GBX 3300 to GBX 3550.
- Sunbelt Rentals Holdings, Inc.: Barclays initiates an overweight recommendation with a target price of GBP 66.
- Vistry Group Plc: JP Morgan maintains its neutral recommendation and reduces the target price from GBP 6.40 to GBP 5.30.
- Lancashire Holdings Limited: Jefferies maintains its buy recommendation and reduces the target price from GBX 736 to GBX 698.
- Derwent London Plc: Goldman Sachs maintains its buy recommendation and reduces the target price from GBX 2790 to GBX 2550.
- Flutter Entertainment Plc: Goldman Sachs maintains its buy recommendation and reduces the target price from GBX 19700 to GBX 15350.
- Entain Plc: Citi maintains its buy recommendation and reduces the target price from GBP 11.50 to GBP 11.
