investingLive European session wrap: Markets hold their breath awaiting US-Iran talks

Headlines:

• Markets keep the calm awaiting a potential US-Iran deal
• Gold remains supported amid US-Iran deal optimism as real yields extend the drop
• US president Trump: I think the war with Iran can be over very soon
• Trump says he thinks extending the ceasefire will not be necessary
• Mediators move closer to extending US-Iran ceasefire – AP News
• US sends thousands more troops to Middle East as Trump seeks to squeeze Iran – WaPo
• IRGC warns to stop all imports and exports in the Gulf of Oman if US continues blockade
• Iran reportedly to use alternative ports to bypass US blockade of Strait of Hormuz
• Japan poised to release around 36 million barrels from its oil reserves
• US president Trump: If Powell doesn’t leave, I have to fire him
• France March final CPI +1.7% vs +1.7% y/y prelim
• Eurozone February industrial production +0.4% vs +0.3% m/m expected

Markets:

• Oil prices bounce back from early lows, WTI crude up 1.1% to $92.25
• US dollar little changed, hold more mixed on the day
• European stocks more cautious, S&P 500 futures flat amid a more tepid mood
• US 10-year yields up 1 bps to 4.265%
• Gold down 0.7% to $4,805, Silver down 1.0% to $78.70
• Bitcoin down 0.1% to $74,054

After the risk rally yesterday, markets are keeping calmer with a bit of a more tepid mood in trading so far today.

US president Trump continues to reaffirm that the war will be coming to an end “very soon”, with traders and investors eyeing a positive outcome from the next round of talks on Thursday.

However, there are some mixed signals with US reportedly sending over more troops to the Middle East while Iran’s military issued threats of disrupting shipping in the Gulf of Oman and Red Sea so long as the US blockade continues.

That is all keeping markets on edge as we look to US trading later, with oil prices bouncing back from the lows since Asia trading. With open interest shifting more towards the June contract, the front-month May contract for WTI crude may not be the best indicative price for the commodity but is still the one in play right now.

That fell to near $87 in Asia trading earlier but has bounced back strongly to around $92.50 currently. In similar vein though, the June contract also fell to just below $85 before jumping back up to sit a little under the $90 mark at the moment.

As for the broader risk mood, things are keeping fairly tepid with equities not doing a whole lot. US futures are keeping near unchanged levels with S&P 500 futures flat on the day. Meanwhile, major indices in Europe are looking fairly cautious today with the DAX also flat and CAC 40 down 0.6% though.

As a reminder, the S&P 500 is just 0.5% away from a fresh record high. So, that gives a better idea about where we stand in having priced in the optimism towards the end of the conflict in the past week.

In the major currencies space, the dollar is sitting little changed with there being not much to work with in European morning trade. EUR/USD is down 0.1% to 1.1777 while USD/JPY is up 0.1% to 158.95 and AUD/USD up just 0.2% to 0.7140.

Precious metals are taking a light knock though with gold down 0.7% to $4,805 while silver is down 1.0% to $78.70 on the day.

It’s still all on US-Iran developments at the moment.

This article was written by Justin Low at investinglive.com.