investingLive European session wrap: Risk retreats as Trump extension sees limited relief

Headlines:Oil prices extend into new highs amid weekend risk hedging as Trump’s jawboning failsThe can being kicked down the road is not a good thing for marketsIRGC warns that Strait of Hormuz remains “closed”, prohibits any passage by US alliesHow have interest rate expectations changed after this week’s events?ECB’s Muller: Not sure we need to wait for fully visible second round effects to actECB policymaker Patsalides says no rush to raise interest ratesBOJ re-estimates Japan’s estimated natural rate of interest after reviewBOJ would hike rates in April “if you think about it normally”, says former governorSpain March preliminary CPI +3.3% vs +3.7% y/y expectedUK February retail sales -0.4% vs -0.7% m/m expectedMarkets:WTI crude oil up 3% to $97, Brent crude oil up 3% to $111S&P 500 futures down 0.5% after being up 0.7% in Asia tradingMajor indices in Europe down over 1% across the board, poised to erase early week gainsUSD steady, GBP lags on the day10-year Treasury yields up 4 bps to 4.46%Gold up 0.8% to $4,415Bitcoin down 3.3% to $66,667US president Trump’s call to further delay strikes against Iran by another ten days is failing to provide much relief for markets as de-risking into the weekend takes priority.By prolonging the status quo, it doesn’t really offer much respite for markets as the situation in the Strait of Hormuz will extend for yet another week at least. That as Iran reaffirms that the waterway remains in de facto closure and that they won’t budge in terms of loosening military restrictions, for now at least.As such, we’re setting up for a battle on the ground perhaps and that won’t ease the look and feel ahead of the weekend. Adding to that, the fact of the matter is nothing changes for markets until something changes with the Strait of Hormuz. And so, that’s how things are playing out right now.Oil prices are ramping back higher with both WTI crude and Brent crude up 3% to $97 and $111 respectively. That continues to eat into the Monday drop as traders brush aside Trump’s efforts to negotiate a “peace” deal.In turn, risk sentiment is starting to sour again as well with US futures slumping during the session. At the start of European morning trade, S&P 500 futures were up around 0.5%. But now, we’re seeing futures down 0.5% instead as investors start to be on edge again.As such, we’re seeing bond yields shoot higher with 10-year yields in the US already breaching the Monday highs at 4.46% currently. That is the highest level since July last year.Elsewhere, the dollar is keeping slightly firmer across the board as it holds gains into the final stretch of the week. EUR/USD is dipping back down towards the 1.1500 mark with USD/JPY continuing to tease a push above 160.00 on the day. The latter might invite Tokyo intervention, so just be watchful on that front.And looking at precious metals, gold and silver are both up a little but have seen stronger gains from earlier in the day fade. Gold is up 0.8% to $4,415 but off earlier highs near $4,475 with silver up 0.4% to $68.30 but off highs of $70.35 earlier today.Headline risks remain the main thing as we look to wind down the week. For now, it seems like markets are still feeling jittery and leaning towards de-risking rather than gamble on any positive surprises from the coming two-day break.
This article was written by Justin Low at investinglive.com.

🔗 Source