Market Summary: What happened yesterday and what awaits us today (April 7)

Market Summary: What happened yesterday and what awaits us today (April 7): 

Global markets between calm and escalation: Oil prices soar and anticipation prevails before the fate of the war and the Strait of Hormuz is decided.

US equity markets closed modestly higher on Monday, with sentiment shaped by a mix of cautious optimism and geopolitical uncertainty following remarks from Donald Trump on the evolving conflict with Iran.

The Nasdaq Composite rose 0.5%, while the S&P 500 and Dow Jones Industrial Average each gained 0.4%, extending a recent recovery. The Nasdaq and S&P 500 notched a fourth consecutive session of gains, with all three major indices having advanced more than 3% last week, snapping a five-week losing streak.

Market direction remained highly sensitive to developments in the Middle East. Trump indicated that Iran may be open to negotiations, raising hopes for de-escalation. However, his warning of severe consequences if the Strait of Hormuz is not reopened underscored ongoing risks, contributing to intraday volatility.

Reports of a potential 45-day ceasefire, mediated by a regional power, further supported risk appetite, with investors cautiously pricing in the possibility of a temporary easing in tensions.

In commodities, oil prices moved higher amid supply concerns. West Texas Intermediate crude climbed to around $112.75 per barrel, while Brent crude rose to approximately $109.77, reflecting fears of disruption in a key global shipping route.

In the digital asset space, Bitcoin advanced to near $69,800 from around $67,300, providing support to crypto-linked equities. Meanwhile, in fixed income, the yield on 10-year US Treasuries edged up to above 4.34%, signalling persistent inflation concerns and reinforcing expectations that interest rates may remain elevated.

Gold prices held steady near $4,680 per ounce, as safe-haven demand balanced against a slightly weaker US dollar.

Market Outlook

Markets are likely to remain highly reactive to geopolitical developments, with the Iran situation continuing to act as the primary catalyst.

In the US, equities may maintain a cautious upward bias if diplomatic signals strengthen, but downside risks remain elevated in the event of renewed escalation. In Europe, markets could face pressure given their exposure to rising energy costs, although energy stocks may outperform. Asian markets are expected to show mixed performance, balancing weaker energy demand against potential trade and manufacturing disruptions.

Looking ahead, the trajectory of oil prices will be critical. A confirmed truce could ease supply fears, pulling energy prices lower and stabilising global markets. Conversely, a breakdown in negotiations or military escalation would likely drive a sharp spike in oil, increase demand for safe-haven assets like gold, and heighten volatility across equities and currencies.