General Market Analysis – 21/04/26

US Stocks Drift Despite Increased Gulf Tensions – S&P off 0.24%
US equity markets closed marginally lower overnight, with investors continuing to monitor developments in the Middle East while largely brushing off ongoing geopolitical risks. The Dow Jones finished virtually unchanged, slipping just -0.01% to 49,442, while the S&P 500 declined -0.24% to 7,109, and the Nasdaq fell -0.26% to 24,404. In fixed income markets, US Treasury yields edged slightly higher, with the 2-year yield rising 1.2 basis points to 3.720% and the 10-year yield up 0.3 basis points to 4.251%. Currency markets saw mixed flows, with the US dollar initially strengthening on safe-haven demand before reversing course to eventually close marginally lower, with the DXY down 0.05% at 98.05. Commodity markets were more reactive to geopolitical tensions, particularly surrounding the ongoing closure of the Strait of Hormuz. Oil prices surged, with Brent crude climbing 4.30% to $94.27 and WTI crude rising 4.65% to $87.79, as traders priced in the risk of further supply disruptions. In contrast, gold eased slightly, slipping -0.20% to $4,820.66, as haven demand remained subdued.

Investors’ Glasses Remain ¾ Full Despite Strait Closure
Some market participants were surprised by the market’s reaction to the updates from the Middle East over the weekend. Things had been looking rosy going into the weekend, but strikes on vessels in the Strait of Hormuz and its closure, alongside the possibility of talks between the US and Iran being delayed, had markets open on the back foot yesterday. However, the downside moves were limited, with stocks in particular proving resilient despite oil prices spiking higher and remaining at elevated levels for the trading day. Attention now moves to whether any talks will take place this week, with both sides remaining cagey, and when exactly the ceasefire between the two nations is set to end – President Trump announced the two-week ceasefire on April 7, so it is set to expire sometime today. Traders are expecting another lively day, with confirmation of talks likely to lead to more relief rallies, while if hostilities resume, the muted reaction that we saw in markets yesterday is unlikely to occur again, especially if oil pushes up through the $100 level again.

Geopolitics and Data to Make for a Busy Day Ahead
Looking ahead, geopolitical developments will remain a key driver of sentiment, though focus will also turn to upcoming economic data, which should keep volatility elevated across all three trading sessions. In the Asian session, New Zealand CPI has already been released, the data printing at +0.9% q/q against the expected +0.8%, pushing expectations for a rate hike from the RBNZ to as early as July. The European session brings UK labour market data, including Claimant Count (exp 22.6k), Average Earnings Index (exp 3.6%), and the unemployment rate (exp 5.2%) early in the session, with any deviations from expectations likely to see some strong moves in the pound. In the New York session, attention will centre on retail sales data (exp +1.4% m/m) and core retail sales (exp +1.4% m/m), due out early in the day, before attention shifts to Washington, DC, and the scheduled testimony from Fed Chair-designate Kevin Warsh in front of the Senate Committee. Pending home sales data (exp 0.0% m/m) also features, and we are set to hear from the Fed’s Christopher Waller later in the day.

The post General Market Analysis – 21/04/26 first appeared on IC Your Trading Edge | Official Blog.