The main factor influencing volatility
The dominant theme of the session was the rapidly evolving situation surrounding the Strait of Hormuz and the US negotiations with Iran. In the morning, markets rose on a wave of optimism following reports by Axios that the parties were nearing a one-page, 14-point peace memorandum; however, in the afternoon, new signs of escalation emerged: an anonymous US government representative confirmed that if Trump returns from China without a deal, the military option would be back on the table. Saudi Arabia and Kuwait have lifted restrictions on the US military’s use of their bases and airspace, paving the way for the resumption of Operation ‘Project Freedom’ later this week, causing oil prices to rebound sharply and erasing earlier losses.
Geopolitics
The Trump administration is resuming the operation to escort commercial vessels through the Strait of Hormuz, with air and naval support, after Saudi Arabia and Kuwait lifted the blockade on access to their bases. The Iranian Foreign Ministry has confirmed that Tehran is analysing the US proposal, but the country has not yet given a formal response, and key issues regarding uranium enrichment remain unresolved. A meeting between Trump and Xi Jinping is scheduled for next week, at which tariffs, Taiwan and sanctions on Chinese chips are to be discussed, representing a further source of geopolitical uncertainty.
Indices
The S&P 500 hit new intraday record highs during the session, but ended the day down around 0.3%, whilst the Dow Jones lost over 260 points, or around 0.5%. The Nasdaq Composite also hit a new record high during the day, but closed trading close to neutral levels, supported by a strong technology sector and the AI segment. The SOX index (semiconductors) has already gained over 60% this year, confirming that technology remains the leader of the broader market. European indices fared significantly worse: the DE40 fell by 1.84%, the ITA40 dropped by 1.96%, and the EU50 declined by 1.98%.
Shares
Datadog (DDOG) jumped by over 22% following its results: revenue rose by 32% year-on-year to a record first-quarter figure of over $1 billion, and the company raised its full-year revenue forecast to $4.30 billion, compared with the consensus estimate of $4.10 billion. Fortinet (FTNT) gained over 15% after raising its full-year billings guidance to $8.8–9.1 billion, which the market interpreted as confirmation of the resilience of corporate cybersecurity spending. McDonald’s (MCD) beat the consensus on both EPS (US$2.83 vs. the expected US$2.75) and revenue (US$6.52 billion, up 9.4% y/y), however, the key metric of global comparable sales (+3.8%) was slightly disappointing, and the growth was driven mainly by higher order values rather than customer traffic, which offset initial gains exceeding 3%. On the other hand, Whirlpool (WHR, approx. 18%), which drastically slashed its full-year EPS forecast to $3.00–$3.50 from the previous $6.00, explicitly citing the war with Iran as the cause of the recessionary slump in demand, and Shake Shack (SHAK, approx. 17%) with clearly disappointing Q1 results.
Currencies
The US Dollar Index (USDIDX) remained virtually unchanged, rising by a minimal 0.10%, whilst the EUR/USD pair fell by 0.04% to around 1.1744. The USDJPY pair gained 0.36% to 156.79, reflecting moderate demand for the dollar amid heightened uncertainty. The zloty reacted strongly to Glapiński’s hawkish tone: firm statements regarding the growing likelihood of rate hikes reinforced the downward trend in EURPLN, which broke through support at 4.2270, whilst the USDPLN pair remained close to 3.6001.
Raw materials
. Crude oil prices have been on a rollercoaster ride: WTI had earlier fallen by over 5% on hopes of a peace deal, but following reports of the resumption of ‘Project Freedom’ and the reversal of the decision by Saudi Arabia and Kuwait, it rebounded sharply and returned above $95 per barrel (WTI) and $100 (Brent). We saw a similar pattern today with SILVER and GOLD, which are now giving up their gains following strong rises. Further movements will depend on the trajectory of US-Iran talks.
Cryptocurrencies
Bitcoin fell by more than 2.11% on the day, trading at around $79,716, reflecting the general rise in risk aversion in the afternoon linked to the escalation of tensions around the Strait of Hormuz.
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