- Equity markets stage a small bounce back
- UK labour market data shows early signs of softness
- The Tim Cook era comes to an end as Apple chooses its new CEO
- Oil dips as Iran engages in another round of talks
Matt Britzman, senior equity analyst, Hargreaves Lansdown:
Equity markets look set to bounce back a touch today, with UK and US futures pointing higher after yesterday’s oil-led selloff that saw energy stocks outperform while much of the broader market slipped. The recent yo-yoing in equity sentiment continues to be driven less by fundamentals and more by swings in oil prices, as investors try to second-guess how Middle East negotiations are progressing. Fresh talks are pencilled in, but timelines for any lasting agreement remain unclear, leaving investors caught between elevated geopolitical risk and hopes that a workable outcome will ultimately be reached – with markets showing a willingness to price in the latter. As earnings season gets underway, that backdrop could translate into a run of solid results paired with cautious outlooks, as executive teams acknowledge the potential impact of higher energy costs without committing too heavily to guidance in an environment where volatility is likely to remain a feature.
UK labour market data is starting to show early signs that higher energy costs linked to the Iran war are feeding through into business hiring plans, with payroll employment falling by 11,000 in March and job vacancies slipping from 721,000 to 711,000. Pay growth is also beginning to ease, with average earnings slowing to 3.8% and the more timely PAYE median pay measure suggesting further softening could be on the way. For investors, a loosening labour market reduces the likelihood of further interest rate hikes, which helps to firm up our view that the Bank of England will keep things on pause until the conflict plays out.
Apple is entering a post-Tim Cook era, with the long-time CEO set to step back from the day-to-day running of the business later this year as product chief John Ternus takes the helm. The succession itself has been widely telegraphed, but the real question for investors is what comes next, not who steps in. Criticism of Apple in recent years has centred less on execution and more on whether it’s lost its edge on product innovation, despite blossoming into a cash-generating powerhouse under Cook’s leadership. Ternus now faces the task of turning Apple’s improving AI software, including its Google Gemini partnership, into a genuinely AI-led device experience that’s compelling enough to drive the next major hardware upgrade cycle.
Oil prices dipped back this morning as reports emerged that Iran will send a delegation for further talks with the US, trimming some of the geopolitical risk premium that had built up in recent sessions. That said, with the Strait of Hormuz still blocked and peace negotiations far from guaranteed, energy markets remain highly sensitive to shifting headlines, which continues to feed directly into broader equity volatility. That uncertainty keeps inflation risks in play and muddies the outlook for interest rates, reinforcing the case for ongoing market swings even as equities attempt to price in an eventual resolution.
