MARKET WRAPS
European stocks stablized and seemed mostly poised to recover some ground lost from Monday's session, as investor sentiment Tuesday continued to reflect the uncertainty hanging over the Middle East.
After not initially publicly committing to renewed peace talks in Pakistan this week, and with the cease-fire between the U.S. and Iran soon to expire, people familiar with the matter told The Wall Street Journal that Iran would send a negotiating team to the summit.
President Trump had warned of attacks against the country's bridges and power plants if it doesn't reach a deal with U.S. negotiators.
Approaching midday, Europe's leading indexes including the FTSE 100 and the DAX were posting gains, while the CAC 40 showed incremental losses, after Trump indicated it was unlikely that he would extend the cease-fire with Iran.
The Europe-wide Stoxx 600 was flat, supported by utilities, energy and tech stocks.
Markets seem to not have given up hope for a permanent Iran peace accord reached within a matter of weeks, according to Macquarie Group.
"We believe that this is the 'correct' attitude so long as traders also recognize that the peace process is likely to be long and jagged, as most peace processes are," it said, adding that crude oil prices will likely remain elevated and that peace talks will possibly be marked by intermittent violence.
Elsewhere, the U.K.'s unemployment rate fell to 4.9% in the three months through February, compared with 5.2% in the three months through January.
Expected soon is Germany's ZEW Indicator of Economic Sentiment.
Economic Insight
Interest-rate hikes by the European Central Bank are not a question of "if" but of "when," DZ Bank said, adding that it expects the first of two hikes over the next six months in June rather than in April.
Money markets also expect the ECB to stay on hold on April 30, but price in a first full 25bp increase in July, albeit with a high probability also for June, according to LSEG.
U.S. Markets:
Equities looked set to rebound Tuesday, with stock futures up in the green after Monday's session broke a 13-session winning streak for Nasdaq.
Forex:
The dollar traded steady as investors balanced fresh tensions between the U.S. and Iran against hopes for a peace deal ahead of potential talks Tuesday.
Sterling rose against the euro and trimmed losses against the dollar after the country's unemployment fell in the three months to February.
The euro fell to an intraday low.
Bonds:
Eurozone government bond yields fell, even as uncertainties continued in the Middle East. Both government bond supply and data releases will be limited in the eurozone on Tuesday.
The 10-year Bund yield was "fairly close" to DZ Bank's 12-month forecast of 3.20%, the bank said, adding however that the bund has limited upside potential as risks to growth in the euro area are noticeably increasing.
Treasury yields were little changed in Asian trade, as peace talks appeared set to resume between the U.S. and Iran and as investors also look forward to Federal Reserve nominee Kevin Warsh's confirmation hearing.
U.K. government bond yields were steady following labor market data unlikely to impact U.K. markets because they cover a period prior to the start of war Middle East war.
Long-end global bond yields remained fairly anchored despite all the uncertainty regarding the outcome of the war in the Middle East, Danske Bank said.
Meanwhile, Commerzbank said that weakness in bonds was an opportunity to add duration.
"The situation looks set to remain messy for some time, but we prefer adding duration when the 10-year Bund yields offer a 3%-handle."
Energy:
Brent and WTI crude futures fell slightly on expectations that the U.S. and Iran will meet this week for a second round of peace talks.
Phillip Nova warned that prices were likely to remain volatile in the near term.
Despite the geopolitical tensions, broader energy prices have eased from late March and early April peaks, a sign that oil markets were stabilizing, Julius Baer said.
Metals:
Gold futures slipped but remained above $4,800 a troy ounce as investors weighed expectations that the U.S. and Iran will discuss peace terms.
"Plans for fresh talks in Pakistan offered some optimism ahead of a looming cease-fire deadline. However, the war continues to disrupt global energy supplies, reinforcing inflationary pressures and expectations that central banks will keep interest rates elevated, a negative for nonyielding gold," MUFG said.
Silver and platinum slipped.
EMEA HEADLINES
AB Foods to Spin Off Primark
Primark owner Associated British Foods will proceed with the spinoff of the budget clothing retailer from its food operations, and list the two businesses in London.
The British conglomerate, a major player in the global sugar market, said it decided to proceed with the split after a strategic review with Wittington, its largest shareholder. AB Foods had said in November that it was considering the move.
France's Thales Logs Surge in Defense Orders
Thales reported higher orders for the first quarter, led by a booming defense business as wars in Ukraine and Iran prompt governments to strengthen their air defenses with new systems and radar technology.
Modern warfare in Europe and the Middle East showed that nations under attack and those in the vicinity remain vulnerable to aerial threats from missiles and drones. NATO-member warplanes shot down several Russian drones over Poland last year, while Iranian missiles and drones have damaged infrastructure across Qatar, Bahrain and other nations in the Gulf since the U.S. attacked Tehran in late February.
EQT Raises Over $15 Billion for Asia-Pacific Private Equity Fund
EQT has raised more than $15 billion for its largest Asia-Pacific private equity fund to date, drawing strong demand as it deepens its footprint in the region.
The Sweden-founded investment firm, which manages more than $318 billion in assets, said the new fund will focus on established Asian businesses across technology, healthcare and other sectors.
Rio Tinto's Iron Ore, Copper Production Rose in First Quarter
Rio Tinto said it produced more iron ore, copper and aluminum in the first quarter of the year, while reassuring investors of limited impacts to date from the conflict in the Middle East.
The world's second-biggest miner by market value reported a 13% year-over-year increase in production from its lucrative Pilbara iron-ore operations and a 9% rise in copper production. Aluminum output was 1% higher than a year earlier.
Saudi Arabia and Iraq Are Caught in a Hidden War Within the War
RIYADH, Saudi Arabia-Iraqi militias backed by Iran launched dozens of explosive drones at Saudi Arabia and other Gulf states during more than five weeks of fighting, in what is becoming a shadowy war within a war pushing some of the world's largest oil producers toward open conflict.
According to at least one Saudi assessment described by a person familiar with it, up to half of the nearly 1,000 drone attacks on the kingdom came from inside Iraq. They included strikes on a Saudi refinery in the sensitive Yanbu oil hub on the Red Sea and oil fields in the kingdom's Eastern Province, people familiar with the matter said.
GLOBAL NEWS
Warsh Embarks on High-Wire Act of Convincing Investors Without Angering Trump
Wall Street and Washington will be watching Kevin Warsh on Tuesday for any sign he has an understanding with President Trump to cut interest rates if installed as chair of the Federal Reserve. Trump will be watching for any sign he doesn't.
The high-wire act starts before Warsh even has the job. Warsh secured the nomination by convincing Trump he shares the president's view that the Fed should be cutting rates. At his Senate confirmation hearing Tuesday, he can reaffirm that case-at a moment when the Iran war has turned economic conditions against it-or begin, carefully, to distance himself from it.
Governments Could Force ECB's Hand If Energy Support Is Too Broad, Lagarde Says
The European Central Bank would have to raise its key interest rate more than would otherwise be the case if governments are too generous with their support for households facing higher energy costs, President Christine Lagarde said Monday.
In a Berlin speech, Lagarde also said the range of possible outcomes for the eurozone economy as a consequence of the conflict in the Middle East is wider than it was after Russia's invasion of Ukraine in 2022.
Kevin Warsh's Finances Likely to Play Key Role in Confirmation Hearings
Senate Democrats plan to press Fed chair nominee Kevin Warsh on Tuesday over perceived gaps in his financial disclosures, arguing he hasn't met the transparency standard other Fed nominees have met and that the public can't tell whether his investments include banks the Fed regulates.
In a preconfirmation filing last week, Warsh disclosed assets worth more than $100 million but declined to identify the underlying holdings of his largest individual investments, citing confidentiality agreements. The Office of Government Ethics conditionally certified the filing, noting it complies with federal ethics law for all but several dozen holdings. It said Warsh will be in compliance only after he divests those holdings, which Warsh has agreed to do if he is confirmed.
Police Chiefs Allegedly Faked Robberies in $5,000-a-Pop Visa Fraud Scheme
OAKDALE, La.-This southwestern Louisiana city of 6,600 is home to a federal prison, a plywood mill and a couple of takeout crawfish joints. Now, it also finds itself at the center of a baffling crime spree.
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