Market direction remains uncertain early Wednesday, with April starting in the same indecisive tone due to the Iran war and uncertainty over reopening the Strait of Hormuz. Weak U.S. data, month-end positioning, and caution ahead of Good Friday kept trading subdued, despite earlier optimism after U.S. President Donald Trump signaled a possible step back from a full-scale conflict with Iran.
On the policy side, Trump adopted a softer (dovish) stance, saying the U.S. could exit the war within two to three weeks and that ending military action does not depend on a deal with Iran. This supports a “mission completion” view, pointing to a possible near-term exit without a formal agreement. However, risks remain high. The United Arab Emirates (UAE) may support reopening the Strait of Hormuz by force, marking its first direct combat role and raising the chances of wider escalation. At the same time, incidents such as an oil tanker strike near Doha and a drone attack on fuel facilities at Kuwait International Airport continue to threaten energy supply routes and keep crude oil markets sensitive.
Trump also suggested that countries should manage the Hormuz oil supply themselves, while Iran’s President said Iran does not seek war but is ready to end it with guarantees against future attacks. Iran’s Foreign Minister Abbas Araghchi rejected a ceasefire and instead called for a complete end to the war. Meanwhile, China and Pakistan have proposed a new plan to resolve the conflict.
Equity markets moved higher on hopes of easing Middle East tensions, but the overall situation remains complex. There was no single major trigger behind the strongest stock rally since May. Positive sentiment came from Trump’s optimism, possible China involvement, and Iran’s signals, yet little has actually changed. The rally began after Trump indicated the U.S. might declare victory and leave Hormuz management to others, reducing fears of attacks on Gulf energy assets but not clarifying oil supply timelines or Iran’s response.
Further gains followed comments from Iran’s President, though these were not new, and it remains unclear whether he has control over the Islamic Revolutionary Guard Corps (IRGC). Meanwhile, oil and foreign exchange (FX) markets did not fully support the equity rally.
Economic data from the U.S. showed mixed signals. Job Openings and Labor Turnover Survey (JOLTS) openings for February came in at 6.882 million versus 6.918 million expected. March consumer confidence rose to 91.8 compared to 88.0 expected. The S&P CoreLogic Case-Shiller 20-city house price index increased 1.2% year-over-year (y/y) versus 1.3% expected. Federal Reserve (Fed) official Schmid said inflation remains the key risk.
In China, the S&P Global Manufacturing Purchasing Managers’ Index (PMI) eased to 50.8 from 52.1 but stayed above 50, marking a fourth straight month of expansion, though growth slowed and cost pressures increased.
The U.S. Dollar Index (DXY) remains under pressure after a weak daily move despite strong monthly gains. Gold, crude oil, Asia-Pacific equities, and cryptocurrencies are slightly higher. EURUSD and GBPUSD show mild gains, while USD/JPY edges down during its three-day losing streak. AUDUSD and NZDUSD are also firmer, and USDCAD continues to fall after recently touching a four-month high.
EURUSD and GBPUSD extend the previous session’s rebound as a softer USD and stronger Eurozone (EU) and German data support gains, even as weak United Kingdom (UK) factors are largely ignored. At the same time, month-start positioning is also helping the corrective recovery in both EURUSD and GBPUSD.
Meanwhile, the UK increased the National Minimum Wage for workers aged 18–20 to 10.85 British Pounds (GBP) per hour from April 1, 2026, providing around 1,500 GBP in additional annual income to more than 200,000 workers.
In other data, Eurozone inflation for March eased, while German figures came in stronger compared to the U.S. On the UK side, Gross Domestic Product (GDP) for the first quarter (Q1) met initial estimates.
USDJPY falls for the third straight session, extending its early-week pullback from the highest level since July 2024, as a softer USD combines with mostly positive Japan data and developments. The pair is also pressured by the currently hawkish Bank of Japan (BoJ) stance. In addition, the Japanese Yen’s (JPY) safe-haven appeal is supporting sellers at the start of April, following a two-month uptrend in USDJPY.
Japan’s BoJ Tankan survey showed improved sentiment among large manufacturers, with the index rising to +17, the highest level since December 2021, although future outlook and profit expectations weakened.
AUDUSD and NZDUSD both extend a two-day recovery, while USDCAD continues its pullback from a four-month high. The softer U.S. Dollar, firmer crude oil prices, and cautious market sentiment, combined with local economic factors, are supporting the Antipodean currencies of Australia, New Zealand, and Canada.
In Australia, Treasurer Jim Chalmers unveiled temporary relief measures for businesses affected by the Iran war, including tax deferrals, payment delays, easier credit access, loan restructuring, and higher credit limits. Despite this, Australia’s manufacturing PMI dropped to 49.8 from 51.0, signaling contraction amid weaker demand and rising costs.
New Zealand building permits rose 2.7% month-on-month (m/m) in February, up from 1.9% previously. Canada’s Gross Domestic Product (GDP) grew 0.1% in January, slightly above expectations of 0.0%.
Oil prices moved slightly higher early Wednesday after a weak session on Tuesday, supported by mixed geopolitical signals. Concerns over the Iran war and the UAE’s potential use of force to reopen the Strait of Hormuz continue to keep oil markets sensitive.
At the same time, gold prices are boosted by a softer USD, ongoing market uncertainty, and month-start positioning, following the metal’s largest monthly decline since October 2008.
Stock markets surged on hopes that the Iran war could end sooner, recording the biggest gains since May 2025 despite a weak monthly performance. Month-end and quarter-end flows likely amplified moves in equities and bonds.
Whether these gains hold through Wednesday and into the long weekend will be closely watched, as market turning points often arise from technical factors and short squeezes. A 3% rise and gains of over 6% in stocks like Meta Platforms Inc. (META) may attract buyers, but the broader trend still depends on developments in Hormuz.
Final numbers showed the Dow Jones Industrial Average (DJIA) was up 1125.19 points (2.49%) at 46341.33, the Standard & Poor’s 500 Index (S&P 500) jumped 184.79 points (2.91%), and the NASDAQ Composite Index rose 795.99 points (3.83%).
Cryptocurrencies also posted modest gains after their first monthly rise in six months, as traders consolidated earlier losses amid a softer USD and renewed optimism around Bitcoin and Ethereum.
Looking ahead, focus shifts to Fed speakers, including St. Louis Fed President Musalem and Governor Barr, along with a key address from Trump on the Iran conflict. Key data includes final March PMI readings for the Eurozone, Germany, Canada, and the UK, followed by U.S. Retail Sales, Automatic Data Processing (ADP) Employment Change, and Institute for Supply Management (ISM) Manufacturing PMI.
Markets will watch efforts to reopen the Strait of Hormuz and any signals of a U.S. exit. If risk sentiment improves due to Trump’s softer tone and weak U.S. data, the USD may remain under pressure. A weaker USD could support gold and crude oil and help other currencies recover. However, USD/JPY may struggle as Japan’s data supports a more hawkish BoJ stance. Cryptocurrencies and equities may begin April on a stronger note if geopolitical tensions ease and U.S. data remains soft.
May the trading luck be with you!
