General Market Analysis – 22/04/26

US Stocks Drop as Uncertainty Reigns in the Gulf – Dow down 0.6%
US equity markets came under pressure in the latest session, with all three major indices closing lower as investors continued to digest ongoing developments out of the Middle East. The Dow Jones fell -0.59% to 49,149, while the S&P 500 declined -0.63% to 7,064, and the Nasdaq slipped -0.59% to 24,259. Sentiment remained cautious despite President Trump extending the ceasefire while talks with Iran continue, with the ongoing US naval blockade and lack of progress on returning to formal negotiations keeping uncertainty elevated. In currency markets, the US dollar strengthened, with the DXY index rising 0.30% to 98.39, supported by higher Treasury yields across the curve. The US 2-year yield climbed 5.8 basis points to 3.779%, while the 10-year yield added 4.1 basis points to 4.292%, reflecting a modest repricing of rate expectations alongside safe-haven flows into the greenback. Commodity markets saw continued volatility, particularly in energy. Brent crude rose 3.81% to $99.22, pushing closer to the key $100 level, while WTI gained 2.81% to $92.13, as supply concerns tied to the Gulf region persisted. In contrast, gold prices moved sharply lower, falling 2.08% to $4,720.04, as the stronger dollar and rising yields weighed on the precious metal despite the geopolitical backdrop.

FX Traders Poised for More Volatility
Major FX markets have been relatively well behaved over the last few sessions as traders continue to assess updates on how things are going to shape up in the Middle East in the short term. The pattern is clearly set: anything that looks like a continuation of the conflict and the Strait of Hormuz remaining shut will see the USD appreciate, while signs of peace and a move back to ‘normal’ will see the USD pull back. Reactions to recent updates, however, have been more muted, with a certain amount of news fatigue creeping into the market, and now traders are expecting to see bigger moves once we have certainty surrounding key points. Last night’s updates saw some reaction, with President Trump again reneging on prior advice, but now we are waiting to see if the two sides will actually come back to the negotiating table or whether we hear the sound of war drums again. Either way, traders are expecting to see the majors break out of recent relatively tight ranges and volatility increase again.

Geopolitics to Dominate the Trading Day Again
Looking ahead, the macroeconomic calendar is relatively light today, though attention will turn to a couple of key data drops and some central bank updates, in between traders monitoring the news wires for updates on the Middle East. There is very little on the calendar in the Asian session, and markets are expected to start on the back foot after the drop on Wall Street yesterday, with any signs that negotiations in the Gulf are still delayed likely to lead to further downside moves. The London session sees the major data release of the day, with key CPI (exp +3.3% y/y and +0.6% m/m) data due out alongside the lower-impact PPI (exp +2.9% m/m) numbers. The US session is quiet on the data front, although the Weekly US Crude Oil Inventory data will attract attention, as will a scheduled speech from ECB President Christine Lagarde.

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