The past week was all about the market pivoting from energy-shock fears to relief on Middle East deescalation, with falling oil, softer inflation expectations and record high equities driving cross asset price action.
Iran announced that the Strait of Hormuz would remain fully open to commercial traffic, and President Trump publicly confirmed the decision, triggering a sharp improvement in risk sentiment.
Energy prices reversed hard: Brent crude slid towards the $90 area and European TTF gas dropped back below EUR 40/MWh as traders priced out the worst-case supply shock.
With the energy squeeze easing, inflation worries cooled and markets brought forward the timing of Fed easing while trimming expectations for a second ECB rate hike in 2026.
US data (cooler than feared producer prices and solid tech earnings) further underpinned the “Goldilocks” narrative of resilient growth plus peaking price pressures, boosting cyclicals and high beta tech.
The dollar lost some of its recent geopolitical risk premium as oil fell and US yields edged lower, but broad FX moves were relatively contained rather than trending.
Safe haven FX outperformed on the crosses, both the Japanese yen and Swiss franc picked up as lower yields and reduced energy stress made carry trades slightly less compelling at the margin.
Analysts highlighted that the drop in crude back below $100 per barrel helped lift global equities back towards record highs and relieved pressure on energy importing currencies, supporting a modest recovery in selected EM and high beta FX.
Crude oil saw a decisive mean reversion move lower: month to date, prices have shed close to 10% from the March spike as ceasefire progress and guaranteed safe passage through Hormuz removed a large part of the supply risk premium.
European natural gas followed suit, with benchmark TTF futures settling below EUR 40/MWh, a level more consistent with “tight but manageable” rather than crisis pricing.
The easing in energy costs took some shine off the inflation hedge bid in precious metals: gold, which had ripped higher alongside the original oil spike, spent the week consolidating after its rebound and trading more in line with real yield moves than with outright fear.
Industrial metals, led by copper, stayed firm to higher on a mix of supply constraints and renewed optimism on AI and electrification driven demand, reinforcing the idea that the commodity complex has split between energy downshift and structural metals strength.
Equities were the main beneficiaries of the improved backdrop. Risk sentiment improved sharply on Friday, with global stocks rallying as the Hormuz headlines crossed.
US indices pushed to fresh highs: CaixaBank notes that the S&P 500 and Nasdaq both printed new record closes for the fifth straight session, underlining how quickly the market has moved from “shock” back to “buy the dip”.
Sector wise, technology continued to lead: the Philadelphia Semiconductor Index hit another all-time high and is up more than 15% over the past month, while Energy lagged badly, down around 9% month to date as oil rolled over.
European and other developed market bourses tracked the US higher, helped by lower yields, softer ECB hike pricing and the prospect that the external energy tax on their economies may be smaller than feared a few weeks ago.
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