Daily Market Outlook - Wednesday, April 15

Global equities extended their post-ceasefire advance, with most major benchmarks now trading above levels seen before the recent US-Iran conflict, reflecting growing optimism around renewed diplomatic engagement between Washington and Tehran. Markets have steadily retraced the losses incurred during the initial phase of the Middle East escalation, with China’s CSI 300 joining the rebound after similar recoveries in Taiwan and Singapore. In the US, Wall Street has already recovered its footing, with the S&P 500 now approaching the all-time high reached in late January. A more constructive geopolitical backdrop is also helping to anchor commodity markets. The prospect of renewed US-Iran talks has kept oil prices below $100/bbl, easing one of the market’s key inflation and growth concerns. Copper has also begun to recover after a six-week decline driven by geopolitical uncertainty. Against that backdrop, the MSCI All Country World Index rose 0.2% on Wednesday, extending its winning streak to nine consecutive sessions, its longest run since September. Even so, European equity futures suggest a softer open, indicating some moderation in near-term momentum. In cross-asset markets, gold eased to around $2,825/oz, while Treasury yields continued to move higher as lower oil prices helped reduce immediate inflation concerns. The US Dollar Index was a little different, stabilising after a week of losses. In the UK, the Debt Management Office sold £15bn of 10-year gilts at a yield of 4.9158%, the highest since 2008, drawing a record £148bn in orders. The high level of interest shows that there is still strong activity in the gilt market even with high yields, but this is more about appealing offers and investors wanting longer-term bonds rather than a clear sign of trust in the overall UK economy's growth.

China’s March trade surplus of US$51.1bn undershot expectations, but the miss is less meaningful than it appears because February exports were distorted by Lunar New Year timing. Looking at Q1 cumulatively, exports were still up a strong 14.5% YoY. The more important takeaway was imports: up 27.8% YoY in March, led by technology and AI-related demand, with crude imports also rebounding. Overall, the data suggest domestic upgrading remains intact, reinforcing China’s move up the value chain and supporting a case for gradual RMB appreciation against a weaker dollar.

While last week’s CPI showed a quick pass-through from higher energy prices to consumer inflation, the March PPI suggested a more contained impact at the producer level. Final demand rose 0.5% m/m, well below the 1.1% consensus, while February was revised down to 0.5% from 0.7%. Core measures also came in softer, with PPI ex-food and energy up 0.1% m/m versus 0.4% expected, and the prior month revised down by 0.2ppt to 0.3%.The report still showed a clear energy effect, with energy prices up 8.4% m/m, but this increase was partly offset by lower food prices (-0.3% m/m) and a soft services reading (+0.1% m/m). On a year-over-year basis, headline final demand rose to 4.1% from 3.3%, helped by both the monthly energy jump and an unfavourable base effect. By contrast, the core gauges were more stable: ex-food and energy eased to 3.7% y/y from 3.8%, while core ex-trade services edged up to 3.6% from 3.5%.Overall, given the move in oil, the result was a moderate rather than alarming report. That said, if current pressures persist, the benign interpretation may not hold for long. Intermediate price measures — which offer a sense of pipeline inflation — continue to show broader upward momentum, a trend that was already in place before the Iran conflict.

Overnight Headlines

Economic Highlights:

- Japan's Core Machine Orders surged 13.6% MoM in February, significantly exceeding the estimated -1.1%. Year-over-year, they rose by 24.7%, well above the expected 8.1%.

Iran Conflict Updates:

- The U.S. has implemented a blockade on Iran, returning tankers and reporting no ships passed the blockade in the initial 24 hours. Talks between Israel and Lebanon are ongoing, but progress remains uncertain. The IMF warns of slowing growth and rising inflation due to the conflict, while the G-24 urges the IMF to adapt to increasing energy costs.

Government and Central Bank News:

- China's growth is expected to rebound in early 2026 despite the Iran war. The U.S. Federal Reserve is involved in tariff refund processes, with potential rate cuts anticipated this year. The Pentagon is enhancing military pilot capabilities with AI.

Fixed Income Insights:

- Japanese Government Bonds (JGBs) show mixed performance, supported by expectations of a Bank of Japan policy hold. Investors are anticipating a bond market rally in response to changing sentiments regarding the Iran war.

Foreign Exchange Trends:

- Asian currencies are stabilizing, potentially benefiting from hopes of U.S.-Iran negotiations.

Commodity and Energy Market:

- Oil prices have declined amid optimism for renewed talks between the U.S. and Iran. Meanwhile, gold prices are slightly lower due to possible technical corrections.

Equity Market Developments:

- DBS reports increased interest from wealthy clients in Asia. The phone market is declining due to a memory crunch and the effects of the Iran conflict. SoftBank is seeking additional financing for OpenAI, while Amazon's deal with Globalstar may enhance its satellite capabilities, intensifying competition with Elon Musk's ventures.

FX Options Expiries For 10am New York Cut

(1BLN+ represents larger expiries and is more magnetic when trading within the daily ATR.)

EUR/USD: 1.1750 (EU2b), 1.1800 (EU1.64b), 1.1610 (EU1.46b)
USD/JPY: 158.85 ($1.49b), 158.00 ($1.35b), 160.00 ($1.17b)
AUD/USD: 0.6900 (AUD1.57b), 0.7125 (AUD1.51b), 0.7130 (AUD678.9m)
USD/BRL: 5.2500 ($410.5m), 5.0780 ($308.2m)
USD/CAD: 1.4300 ($364.5m), 1.3930 ($300m)
USD/CNY: 6.8000 ($350m), 6.9000 ($316.4m)
NZD/USD: 0.5725 (NZD349.1m), 0.5650 (NZD310m), 0.5750 (NZD301.8m)
EUR/GBP: 0.8730 (EU328.7m), 0.8650 (EU307.3m)

CFTC Positions as of April 10, 2026:

Equity fund speculators increase S&P 500 CME net short position by 12,328 contracts to 228,259
Equity fund managers raise S&P 500 CME net long position by 27,168 contracts to 939,849
Speculators trim CBOT US 5-year Treasury futures net short position by 33,911 contracts to 1,552,929
Speculators increase CBOT US 10-year Treasury futures net short position by 39,561 contracts to 823,624
Speculators increase CBOT US 2-year Treasury futures net short position by 74,691 contracts to 1,712,015
Speculators trim CBOT US UltraBond Treasury futures net short position by 7,746 contracts to 260,383
Speculators increase CBOT US Treasury bonds futures net short position by 27,363 contracts to 58,996
Bitcoin net long position is 2,540 contracts
Swiss franc posts net short position of -30,694 contracts
British pound net short position is -56,354 contracts
Euro net short position is -7,541 contracts
The net short position in Japanese yen is -93,742 contracts.