Key events
Investors take a ‘glass-half-full view’ of ceasefire deal
Now a couple of hours into trading, the FTSE 100 is still pretty flat this morning, and the Stoxx Europe 600 is up by about 0.4%.
Matt Britzman, an equity analyst at the broker Hargreaves Lansdown, says investors are taking a “glass-half-full view” of the ceasefire in the Middle East.
Global stock markets look set to end a volatile week on a more positive footing, with investor sentiment showing tentative signs of recovery heading into the weekend. The FTSE 100 opened broadly flat this morning, with US markets expected to follow suit later this afternoon.
While the term ‘ceasefire’ is used somewhat loosely, there has been enough perceived de-escalation in the Middle East to ease some of the pressure on risk assets we saw earlier in the week. The prospect of in-person talks between the US and Iran over the weekend is also helping steady nerves, offering hope that diplomatic channels remain open. Taken together, investors are becoming more comfortable that, while risks remain, the broader trajectory is moving in the right direction.
He adds that gold, which is normally used as a safe haven asset during volatile periods, is on track for its third consecutive weekly gain. It is currently trading at about $4,739 per ounce, down 0.46%.
…Although it has not acted as the store of wealth or shock absorber that many might have expected during the recent Middle East tensions. That is largely because interest rate expectations have been the bigger driver of price action, outweighing the typical risk-off demand. This week’s tentative ceasefire, coupled with news of talks over the weekend, has shifted rate expectations into a more favourable position for gold, helping support the latest move higher.”
Japan confirms release of more oil reserves
Justin McCurry
Japan will release additional oil reserves early next month, the prime minister, Sanae Takaichi, said on Friday, as concern grows over energy shortages caused by the crisis in the Middle East.
It will be the second time that Japan, which is heavily dependent on Middle East oil, has dipped into its strategic reserves since the US-Israel war on Iran started in February.
Last month Takaichi approved the release of 50 days’ worth of oil – the government’s biggest ever release – as the government attempted to head off a spike in prices.
She said at a ministerial meeting held to discuss the conflict:
To ensure the stable supply of crude oil, we will release starting in early May the equivalent of roughly 20 days’ worth [of oil] from the national reserves.
Japan has enough oil in reserve to last 230 days, but it is also imports 95% of its crude oil from Middle East, most of which is transported through the strait of Hormuz.
Most of Japan’s reserves – 143 days’ worth – are state owned, with the remainder belonging to the private sector and oil-producing countries in the Gulf.
Japan is also trying to secure oil from locations that do not ship via the strait of Hormuz, amid uncertainty over whether the waterway will fully reopen after a two-week conditional ceasefire announced by Donald Trump this week.
By May, Japan should be able to secure more than half of oil imports via other routes, Takaichi said, although she did not provide details.
Scott Bessent called in US banks to discuss Anthropic cyber risk – reports
Kalyeena Makortoff
The US Treasury secretary, Scott Bessent, summoned major American bank chiefs to a meeting in Washington this week amid concerns over the cyber risks posed by Anthropic’s latest AI model, according to reports.
Bosses including the Federal Reserve chair, Jerome Powell, were said to have gathered at the Treasury headquarters for the meeting after the release of the Claude Mythos AI model that Anthropic says poses unprecedented cybersecurity risks.
A recent leak of Claude’s code prompted the startup to release a blogpost at the beginning of the month saying that AI models had surpassed “all but the most skilled humans at finding and exploiting software vulnerabilities”, adding: “The fallout – for economies, public safety, and national security – could be severe.”
This week’s meeting was reportedly called while bank bosses were already in Washington for a lobby group meeting, with a guest list focused on heads of systemically important banks – meaning regulators believe a major disruption to their operations, or their potential collapse, would put financial stability at risk.
Attenders included the Goldman Sachs chief executive, David Solomon, Bank of America’s Brian Moynihan, Citigroup’s Jane Fraser, Morgan Stanley’s Ted Pick and the Wells Fargo boss Charlie Scharf, according to Bloomberg, which first reported details of the meeting. JP Morgan’s Jamie Dimon was invited but unable to attend.
The rise in the oil price is strengthening this morning, with Brent crude – the international benchmark – now up 1.9% to $97.79 a barrel.
European stocks open tentatively higher
There is a cautious mood this morning in the European stock market, with some small rises across the board.
The UK’s blue chip FTSE 100 is up very slightly by 0.1%, while the French Cac 40 index is practically flat. The German Dax is also up 0.1%.
The Stoxx Europe 600, which tracks the biggest companies across the continent, has ticked up 0.2%.
Some investors will be waiting for signs out of planned talks this weekend over US and Iran, says Richard Hunter, of the broker Interactive Investor.
Ahead of planned talks this weekend between the warring parties on a possible permanent solution, there clearly remains much to iron out. Most notably, Iran is maintaining its control of the strait of Hormuz, with reports suggesting that the passage remains effectively closed with only bulk carriers carrying dry cargo, rather than oil, getting through.
At the same time, the US military is maintaining its presence in the region, although more positively Israel has opened the door to negotiations with Lebanon, after Iran had called the ongoing attacks a violation of the ceasefire agreement.
Nonetheless, this was apparently enough for the bulls to nibble on, despite another tick higher in the oil price. [Yesterday] the Nasdaq continued with its recovery, helped along by a gain of almost 3% for Meta Platforms as it revealed its new AI model.
…The cautious progress has improved the fortunes of the main indices and has tipped the Dow Jones into positive territory, now guarding a cautious gain of 0.3% for the year so far. Meanwhile, the more tech-focused S&P500 and Nasdaq remain in the red but on an improving trend, with losses of 0.3% and 1.8% respectively in the year to date.
The electronics retailer AO World is also reassuring investors that it has some shelter from rising energy costs. It said in a statement this morning:
The Group had hedging arrangements in place in advance of recent geopolitical developments, covering approximately 80% of forecast fuel usage and 100% of electricity usage which cover the full FY27 trading period.
The company, which sells electronic goods such as fridges as well as laptops and PCs, added that its profit is on track to be at the “top end” of its £45-50m guided range for its year ended in March.
Its shares are up by about 7% in early trading.
Student landlord Unite ‘well protected’ from energy costs rise
Closer to home this morning, the student landlord Unite has told investors that it is “well protected” from energy price increases triggered by the war in Iran.
The company said in a trading statement:
Our hedging strategy for utility costs means we are well protected in the near-term from the impact of recent increases in energy prices following the onset of the conflict in Iran.
The accommodation provider has also maintained its guidance for occupancy and rental growth, at the lower end of their respective ranges for the 2026/27 academic year.
About 74% of Unite’s beds have been reserved for the 2026/27 academic year, compared with a rate of 76% in the year prior.
Oli Creasey, head of property research at Quilter Cheviot, says:
The company’s portfolio reservation rate for the upcoming academic year is behind the rate observed this time last year, despite last year itself being slow historically. The company is also continuing to guide to the low end of provided ranges for occupancy and rental growth in the coming year.
Also of note is that management is accelerating the rate of disposals of assets as the company looks to shrink the portfolio and focus on the cities with the best opportunities. The ongoing disposal programme is going as planned, but Goldman Sachs has been appointed as an adviser to propose ways that disposals could go further or faster than previous expectations. What exactly this will look like remains to be seen, but the acceleration theme suggests it could be potentially transformative for the portfolio.
Asian stock markets rose overnight, with Japan’s Nikkei index and China’s CSI300 index both up by about 1.8%. The South Korean Kospi rose 1.5%, and Hong Kong’s Hang Seng nudged up 0.5%.
Mohit Kumar, of the broker Jefferies, notes that markets “want to rally”.
We do acknowledge that the ceasefire is fragile and risks of a short term escalation to gain an upper hand in negotiations remain. But the view that is that any dips would be a buying opportunity. We are still keeping the risk profile low given the potential for near term volatility.
Introduction: Oil prices tick up amid worries over US-Iran ceasefire deal
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
There has been another small rise in the oil price this morning, as doubt lingers around the US-Iran ceasefire deal.
Brent crude, the international benchmark for oil, has ticked up 0.6% to $96.45 a barrel, having plunged by more than 10% earlier in the week to below $100 a barrel after news of the agreement first emerged.
But the fragility of the deal is testing investor nerves. US president Donald Trump has warned Iran that charging fees for passage through the strait of Hormuz, the key shipping channel through which about a fifth of the world’s oil and gas supply normally passes, is “not the agreement we have”.
He wrote on his social media platform, Truth Social:
There are reports that Iran is charging fees to tankers going through the Hormuz Strait — They better not be and, if they are, they better stop now!
A few hours later he wrote:
Iran is doing a very poor job, dishonorable some would say, of allowing Oil to go through the Strait of Hormuz. That is not the agreement we have!
However, the president has also told reporters that he was “very optimistic” a peace deal was within reach and that he had asked Israel’s prime minister Benjamin Netanyahu to pull back on strikes in Lebanon.
He told NBC News:
I spoke with Bibi and he’s going to low-key it. I just think we have to be sort of a little more low-key.
Meanwhile, the impact of the war in Iran is spreading across the global supply chain: China has recorded its first year-on-year increase in factory gate prices since 2022.
The producer prise index rose 0.5% in March year-on-year, compared with a drop of 0.9% in February. The last time Chinese producer inflation was positive was in September 2022.
Kelvin Lam, a senior economist at Pantheon Macroeconomics, explains:
Industries that are more tied to energy as an input, or with intermediate inputs that have a high energy content, are witnessing higher factory gate prices despite soft domestic demand and the ongoing slump in the property sector.
Earlier industrial profit data point in the same direction, with energy-intensive and metal industries seeing moderate improvements in margins, suggesting modest pass-through to end users. According to the NBS, oil and gas extraction PPI rose 15.8% m/m in March, while petroleum and coal processing PPI increased by 5.8%. Chemical products PPI rose 3.6%, while non-ferrous metal processing eased to 1.0% from 3.6% in February.
Consumer prices however rose 1% year-on-year in March, which marked a deceleration against an annual rate of 1.3% in February.
The agenda
-
1.30pm BST: US CPI inflation rate and real earnings data for March
-
3pm BST: US factory orders
-
3pm BST: University of Michigan’s US consumer sentiment index
