Market Analysis Summary - Week of April 6, 2026
Overview
This report provides a detailed analysis of the market movements and economic indicators from the previous week, focusing on the impact of geopolitical tensions in the Middle East, particularly the ongoing US-Iran conflict, and key economic data releases from the US and China.
What Happened Last Week
Iran Conflict Rattles Markets
President Trump indicated that the US military campaign against Iran could conclude within two to three weeks, while also threatening to target Iran's power grid if the Strait of Hormuz remains closed. This uncertainty led to a surge in Brent crude prices, which rose by 7.8% to around $110 per barrel.
China PMIs Return to Expansion
China's official manufacturing and non-manufacturing PMIs showed improvement, rising to 50.4 and 50.1 respectively, indicating a return to expansion. However, rising input costs are putting pressure on corporate margins.
European Inflation Surges
Euro area inflation increased to 2.5% YoY in March, driven by energy prices amid the Middle East conflict, although core inflation eased to 2.3%.
Mixed Signals in US Labor Market
US non-farm payrolls rose by 178,000 in March, surpassing expectations, while the unemployment rate fell to 4.3%. However, wage growth slowed, raising concerns about consumer spending amid rising energy costs.
Markets in Focus
US Equity Rebounds
US equities rebounded sharply, with the S&P 500 gaining 3.4%. The tech sector saw significant gains, particularly Intel, which surged 16.8% following a major acquisition announcement.
Hang Seng Index Performance
The Hang Seng Index ended a four-week losing streak, rising 0.7%. However, investor sentiment remained cautious due to geopolitical uncertainties, with limited inflows from mainland investors.
Nikkei 225's Worst Month Since 2008
The Nikkei 225 experienced a 13.2% decline in March, its worst monthly performance since the financial crisis, largely due to Japan's heavy reliance on Middle Eastern energy supplies.
The Week Ahead
The upcoming week will focus on inflation data from the US and China, which could influence central bank policies. Key releases include the US consumer price index and personal consumption expenditures, as well as China's inflation rate.
Key Macro Events This Week
- April 7: US durable goods orders MoM
- April 9: US FOMC meeting minutes
- April 10: US and China inflation rates
Conclusion
Market participants should remain vigilant as geopolitical tensions and economic data releases could lead to increased volatility in the coming weeks. The interplay between inflation dynamics and central bank responses will be crucial in shaping market sentiment.