- Global equity markets move higher on signs of de-escalation
- UK markets react to inflation data, probability of rate hikes moves to 99%
- ASOS sees some early signs of a more sustainable recovery
- US markets slid last night, but futures look more positive
- Oil pulls back but still remains at elevated levels
Matt Britzman, senior equity analyst, Hargreaves Lansdown:
“Global equity markets are pointing higher this morning after optimism grew around a potential resolution to the Middle East conflict, following reports that the US is pursuing talks with Iran. Reports suggest that Washington has sent Tehran a 15-point proposal aimed at resolving tensions, while Israeli media indicate that the US is pushing for a one-month ceasefire to allow negotiations to take place. Oil prices have moved lower on the developments, offering some relief to equities that had been weighed down by worries over inflation and the knock-on impact for interest rates. It’s still a highly fluid situation, trying to call how the rest of the week plays out would be unwise, but there are now clearer signs that we are on a path toward de‑escalation.
UK markets have opened higher off the back of easing Middle East tensions, with investors taking a measured view of this morning’s inflation print. CPI held steady at 3.0% in February, right in line with expectations, but this is before the latest surge in energy prices feeds through. A pick-up in core inflation to 3.2% alongside still-sticky services inflation shows underlying price pressures haven’t gone away, but falling fuel and food costs offered some welcome offset for now. Looking ahead, the real story for UK markets will be what comes next, with elevated oil and gas prices expected to push inflation higher by the end of the year. The market is all but certain that the Bank of England will hike rates this year, with the implied probability now at 99%, but we know how quickly these odds can shift, and we don’t think it’s quite as clear-cut.
ASOS looks to be heading in the right direction this morning, with first-half sales down 9% but trends improving across the period, a sign that the turnaround story may be gaining some traction. Encouragingly, gross margins came in stronger than expected, as supply chain improvements and more full‑price selling began to feed through. With full‑year cash profit (EBITDA) guidance reiterated at £150–180 million and new customer growth ticking up across key markets, there are early signs that efforts to clean up inventory and refocus on customer engagement could be laying the groundwork for a more sustainable recovery.
The S&P 500 slipped 0.4% last night, but there’s a brighter tone this morning with futures edging higher as oil prices fall on hopes the White House can bring the Middle East conflict to an end. Under the surface, Tech told a more mixed story, with Software stocks once again lagging behind the rest of the pack. Meanwhile, companies building the nuts and bolts of AI, like hardware and equipment firms, held up much better. It might be too early to call it a turning point, but the return of familiar trading patterns could be a very early indicator that the market is starting to think about life beyond the Middle East conflict.
Oil remains as volatile as ever, pulling back on hopes of de‑escalation in the Middle East, but prices are still sitting at seriously elevated levels. Social media posts and press conferences can only go so far, and it will likely take a full reopening of the Strait of Hormuz to drive any meaningful and sustained move lower from here.”
