Asian markets provided little direction overnight, leading to a subdued UK mood, although the main indices made cautious progress in opening exchanges. The remains down by 3.4% so far this year, weighed down by a cocktail of domestic economic issues and the more general risk-off approach which has blighted other global markets.
The premier index has fared rather better, although there were a few features of note at the open, outside of some inevitable strength for the likes of BP (LON:) and Shell (AS:) as they continue to track the fortunes of the oil price.
The corporate calendar remains light with the first quarter reporting season yet to kick in, although the possibility remains that such news could be overshadowed by events in the Middle East. In the meantime, the remains defiantly positive on balance, having added 5.2% in the year to date despite the current market uncertainty. By the same token, this performance could provide a springboard should a resolution to the conflict be reached, leading to the possibility of a return to the spike that the index was enjoying up until the end of February.
Meanwhile, US markets finished on a cautiously positive note after the long weekend, but in the immediate term, investors are facing a binary event – ceasefire or further escalation of the conflict.
As such, guidance continues in the form of often unconfirmed third-party reports detailing progress (or the lack of it) in negotiations. There is little doubt that the US President’s latest deadline to Iran expires this evening, where, in the absence of any agreement from his foes, he has threatened to destroy Iran’s power plants and bridges, causing irreversible damage to the country’s energy infrastructure.
The latest reports perhaps suggest a less sinister outcome, with claims that mediators are discussing a 45-day ceasefire, which could conceivably mark an end to the war. Separately, it is claimed that such an agreement would be accompanied by an immediate reopening of the Strait of Hormuz. In any event, time is quickly running out as the deadline approaches, which in turn will keep investor sentiment brittle and on high alert.
Closer to home, investors had the first chance to react to the report, which had been released outside of market hours on Good Friday. It confirmed that 178000 jobs had been added in March, significantly higher than the 60000 that had been expected.
Less positively, the shock of the previous month, where 92000 jobs were lost, was exacerbated after revisions, which took the figure to a negative 133000, underlining the Federal Reserve’s challenge. Its dual mandate of managing employment and inflation, as far as that is possible, is now under pressure on both sides, given a labour market clearly facing challenges alongside the inflationary impact of the war via the oil price.
Despite a positive close, the main indices remain in the red with the current clouds of uncertainty restricting immediate visibility. In the year to date, the has shed 2.9%, while the more growth and technology-focused and are down by 3.4% and 5.4% respectively.