The Middle East War is now into its sixth week and will remain front and centre. We’ve had continued messaging from both sides to try and decipher, but in truth, no-one has any edge on how events will unfold. On Saturday, President Trump posted a message on Truth Social reminding Iran that it has two days to open the Strait of Hormuz or “all hell will reign down on them.” This was followed on Sunday morning by a message stating that power plants and bridges are likely targets on Tuesday.
US employment data on Friday showed that the US economy added more jobs than forecast in March following a weather and strike depressed February. The strong rebound masks a different picture under the hood, with a distinct lack of breadth and high degree of concentration for where jobs have been created, now over the past few years. The Middle East conflict will likely pose challenges going forward for a job market which faces elevated geopolitical, economic and market worries, as price pressures rise and consumer spending is squeezed by higher energy costs.
This week, we’ll be watching to see if we get more market signals that we have entered a demand destruction stage, as yields fall while oil prices rise. That points to increased concerns around growth over inflation. It’s also the run-up to the start of quarterly earnings season. Among the first to report are Delta Air Lines with the focus on how it shapes its guidance. Exxon and Shell will also be reporting during the week. The major US stock market indices are all still below their 200-day SMAs, while the dollar is close to a key resistance zone again.