US President Donald Trump gave Iran until April to reopen the Strait of Hormuz and warned that otherwise its energy infrastructure would be targeted, dragging investors into an anxious wait that will last for the next 10 days.
The main agenda in the markets next week will be high geopolitical tension. This is expected to be accompanied by important macroeconomic data to be announced and the first quarter balance sheets of the companies.
1. RIDICULOUS FLUCTUATIONS IN MARKETS
As the first quarter comes to an end, global markets are leaving behind an extraordinary period dominated by geopolitical developments.
Since the outbreak of the Iran war, there has been a loss of approximately 7 trillion dollars in global stock markets; Since the beginning of the year, oil prices have increased by 70 percent and natural gas prices by 85 percent.
While interest rate increases have come to the agenda again as inflation concerns increase due to sharply rising energy prices, the attractiveness of artificial intelligence investments, one of the strongest themes of the markets in recent years, has also begun to be questioned.
The 16 percent decline in gold prices this month indicated that investors are now having difficulty finding areas that can be considered safe.
As we enter the second quarter, the ongoing conflicts, the expectation of a decrease in interest rates being replaced by increases again, and the busy election calendar bring to the fore the following question for investors: Will there be a new beginning, or will the fluctuation continue?
2. GOOD TIMING
While March was quite turbulent for the oil market, the sharpest price movements were seen in the energy markets since the coronavirus period.
US President Donald Trump, in his statement on social media at the beginning of the week, said that the talks with Iran were “constructive” and pointed out that the conflicts could end, causing oil prices to fall by 15 percent within minutes.
The transaction worth approximately 500 million dollars, which was made on the oil price approximately 15 minutes before Trump’s post and was mostly in the direction of selling, also attracted attention. It is unknown who owns this transaction.
As we enter the new week, the picture is clear for traders: It is critical to take quick positions and monitor the news flow closely when such sudden price movements occur.
3. US EMPLOYMENT GROWTH DATA TO BE WATCHED
While investors evaluate the effects of the increase in energy prices, US non-farm employment and unemployment data for March will give important clues about the course of the economy.
Nonfarm payrolls data to be released next Friday is expected to show monthly employment rising by 48,000, according to a Reuters poll.
In February, non-agricultural employment decreased by 92,000, below expectations, and the unemployment rate increased to 4.4 percent.
Investors will be watching to see whether the rise in energy prices will begin to put pressure on consumer spending and the overall economy.
Uncertainty about how the Iran war will end also clouds the economic forecasts of the US Federal Reserve (Fed).
Markets no longer expect an interest rate cut from the Fed this year, as the rise in oil prices fuels concerns that inflation will rise.
4. WILL THERE BE AN INTEREST RATE INCREASE IN THE EURO AREA?
The Eurozone’s leading consumer price index (CPI) data will be announced on Tuesday next week.
Inflation, which has been around 2 percent for a long time in the euro area, is expected to rise in the face of rising energy prices, just like in 2022.
Economic data for March may increase pressure on the European Central Bank (ECB) to raise interest rates next month. Although it was almost unthinkable before the Iran war that the ECB would increase the policy rate, this possibility is now priced in.
