①The current focus of global investors remains on the military actions by the US and Israel against Iran. President Trump of the United States issued a 48-hour ultimatum to Iran, while Israel is preparing to attack Iran’s energy facilities; ②The market is paying close attention to next week’s US Consumer Price Index (CPI) and other inflation data, as well as the likelihood of an interest rate cut by the Federal Reserve later this year.
Cailian News reported on April 5th (edited by Niu Zhanlin) that the main focus for global investors remains on the military actions by the US and Israel against Iran. Although the war has been ongoing for more than a month, its impact and influence on the market have not subsided. The prices of major global asset classes continue to fluctuate largely in response to changes in the situation.
According to reports, President Trump of the United States issued another 48-hour ultimatum regarding Iran on Saturday. “Remember I gave Iran 10 days to reach an agreement or reopen the Strait of Hormuz. Time is running out – 48 hours from now, hell will be unleashed upon them.”
Subsequently, a senior Israeli defense official stated that Israel is preparing to launch an attack on Iran’s energy facilities but is still awaiting permission from the United States. He also noted that such an attack would likely occur within the coming week, indicating that this conflict may escalate further.
Meanwhile, diplomatic negotiations eagerly awaited by the market have so far failed to make substantial progress. Over the past ten days, the United States and Iran have conducted indirect talks through Pakistan, Egypt, and Turkey, attempting to reach a ceasefire agreement contingent on reopening the Strait of Hormuz. However, two sources involved in the negotiations revealed that mediators are still struggling to arrange direct meetings between the US and Iran, with little success thus far.
One of the sources stated that Iran has so far rejected any proposals for a temporary ceasefire, demanding instead a permanent end to the war, along with explicit assurances from the US that no further attacks will be launched.
In the US stock market, the S&P 500 Index recorded gains this week, ending five consecutive weeks of declines. Since the end of February, this benchmark index had been weighed down by the war and the resulting surge in energy prices.
Matthew Miskin, Co-Chief Investment Strategist at Manulife John Hancock Investments, stated: “It is difficult for the market to shift its focus away from the situation in the Middle East, oil prices, and the associated risks. At present, the market is closely monitoring geopolitical risks and how events will ultimately unfold.”
The impact of the war on oil supplies and energy prices remains a key concern for investors, particularly the situation in the Strait of Hormuz—a critical channel for Middle Eastern oil transportation currently experiencing disrupted shipping.
The price of US WTI crude oil briefly exceeded $110 per barrel on Thursday. Doug Huber, Deputy Chief Investment Officer at Wealth Enhancement Group, stated: “The core driver of current market pricing is oil prices. Inflation expectations, the bond market—almost everything revolves around movements in oil prices.”
The upcoming release of the US Consumer Price Index (CPI), a key inflation indicator, will serve as an early litmus test for assessing the impact of the energy shock. The US CPI for March is expected to rise by 0.9% month-over-month, while the core CPI, excluding food and energy, is projected to increase by 0.3%.
Since the beginning of this year, the price of US WTI crude oil has surged by more than 90%. Meanwhile, the average gasoline price in the US has climbed above $4 per gallon this week, reaching a new high in over three years.
BNP Paribas noted in its outlook on the CPI data: “We believe that the first phase of pass-through effects from rising oil prices will be reflected in motor vehicle fuel prices in March.”
Miskin stated that he would focus on the ‘chain reactions’ of the war and surging energy prices on other goods and services, adding that the March data might not yet fully reflect broader inflationary impacts. ‘The current emphasis is on obtaining real-time data as much as possible to gauge the direction of inflation and economic growth trends.’
Driven by inflation concerns fueled by the war, the market has largely ruled out the possibility of the Federal Reserve cutting interest rates this year, which was previously one of the key factors supporting the stock market rally.
Patrick Ryan, Chief Investment Strategist at Madison Investments, stated: ‘The market is already highly sensitive to inflation. If the CPI data significantly exceeds expectations, it could pose a negative shock to the market.’
Another inflation indicator, the US February Personal Consumption Expenditures Price Index (PCE), will also be released next week. However, as this data reflects conditions prior to the full escalation of the war, its reference value for the current inflation situation is relatively limited.
In addition, revised figures for US Q4 economic growth will be released, and the minutes of the Federal Reserve’s March meeting will also be published, offering investors clues about the future path of interest rates.
Overview of key events next week:
Monday (April 6): US March ISM Non-Manufacturing PMI, US March Global Supply Chain Pressure Index, multiple European stock exchanges will be closed due to Easter Monday, A-shares and Hong Kong stocks will also be closed for one day.
Tuesday (April 7): Eurozone March Services PMI Final, Eurozone April Sentix Investor Confidence Index, US February Durable Goods Orders Month-over-Month, US March New York Fed 1-Year Inflation Expectations, China March Foreign Exchange Reserves.
Wednesday (April 8): US API crude oil inventory for the week ending April 3, Japan’s February trade balance, New Zealand’s Federal Reserve interest rate decision as of April 8, UK’s Halifax seasonally adjusted house price index month-over-month for March, Eurozone’s February PPI month-over-month, Eurozone’s February retail sales month-over-month, US EIA crude oil inventory for the week ending April 3, US EIA strategic petroleum reserve inventory for the week ending April 3, Chicago Fed President Goolsbee delivers a speech on monetary policy, Reserve Bank of India announces interest rate decision.
Thursday (April 9): US 10-year Treasury bond auction as of April 8, US initial jobless claims for the week ending April 4, US February core PCE price index year-over-year, US February personal spending month-over-month, US EIA natural gas inventory for the week ending April 3, Federal Reserve releases minutes of the monetary policy meeting, Swiss National Bank President Schlegel delivers a speech, IMF Managing Director Georgieva delivers the opening remarks at the IMF/World Bank Spring Meetings.
Friday (April 10): China’s March CPI year-over-year, Germany’s final March CPI month-over-month, US March unadjusted CPI year-over-year, US March seasonally adjusted CPI month-over-month, US preliminary April one-year inflation expectation, US preliminary April University of Michigan consumer sentiment index, US February factory orders month-over-month, China’s March M2 money supply year-over-year, Bank of Korea announces interest rate decision.
