Closing Recap
U.S. stocks staged an impressive turnaround on Monday, erasing early losses to finish broadly higher as investors pinned their hopes on the prospect of renewed peace talks between the U.S. and Iran. The major indices opened in the red, carrying over the negative momentum from last week’s failed negotiations and the imposition of a U.S. naval blockade. However, the mood shifted as the day progressed, fueled by comments from President Trump indicating a willingness to end the conflict, even if the Strait of Hormuz remains closed, and reports that talks could resume as soon as Thursday. The tech-heavy Nasdaq led the charge, surging 1.23% to post its 9th consecutive daily gain, while the S&P 500 closed near 6,885. This “risk-on” shift sent crude oil prices tumbling from their morning highs and pushed Treasury yields lower. The U.S. dollar extended its losing streak, boosting the euro and pound, while precious metals also found a bid.
Key Takeaways
- Stocks Erase Early Losses to Finish Strong: U.S. equities rallied as hopes for a diplomatic resolution to the U.S.-Iran conflict overpowered the negative sentiment from the weekend’s failed talks.
- Nasdaq Posts 9th Straight Win: The technology sector was the clear leader, driving the Nasdaq to its ninth consecutive daily gain, a streak not seen since 2009.
- Trump Comments Spark Relief Rally: President Trump’s reported willingness to end the military campaign, even without a reopened Strait of Hormuz, was the primary catalyst for the market turnaround.
- Oil Prices Retreat from Highs: Crude oil initially surged on the naval blockade news but reversed course to close lower as the prospect of renewed negotiations eased immediate supply fears.
- VIX Plunges Below 20: The market’s “fear gauge” officially fell below the critical 20 threshold, signaling a transition from panic back to a calmer, “buy the dip” environment.
- Dollar Sinks for 6th Day: The U.S. Dollar Index (DXY) tumbled to its lowest level since early March, as the easing of geopolitical tensions reduced safe-haven demand.
- Bitcoin Surges Near $75k: The crypto market participated in the risk-on rally, with Bitcoin climbing near $75,000, further fueled by massive purchases from MicroStrategy.
- Australian Business Confidence Collapses: The economic toll of the energy shock is becoming apparent, with Australian business confidence suffering its second-largest monthly drop on record.
- Earnings season kicks off with Goldman beating expectations – Goldman Sachs reported Q1 EPS of $17.55, beating estimates on record equities revenues. JP Morgan Chase reports today (April 14), marking the first real test of the financial services thesis in a lower-rate environment.
- U.S. PPI Data Looms: The market is now bracing for today’s U.S. Producer Price Index (PPI) report, which will be the first major inflation print to capture the impact of the Iran war.
Market Overview
Monday evening’s action was a textbook example of how geopolitical risk premiums unwind when the narrative shifts. Monday’s session was a testament to the market’s enduring “buy the dip” mentality and its desperate desire for a peaceful resolution in the Middle East. The day began with the ominous reality of a U.S. naval blockade and the collapse of the Islamabad peace talks, which logically should have triggered a severe risk-off reaction. Indeed, oil prices initially spiked and stock futures fell. However, the narrative quickly shifted. Investors seized on any hint of diplomatic progress, specifically President Trump’s reported willingness to end hostilities and rumors of a new round of talks later in the week.
| Index | Up/Down | % | Last |
| DJ Industrials | 299.89 | 0.63% | 48,216 |
| S&P 500 | 69.09 | 1.01% | 6,885 |
| Nasdaq | 280.84 | 1.23% | 23,183 |
| Russell 2000 | 39.89 | 1.52% | 2,670 |
This rapid shift in sentiment highlights a market that is aggressively pricing in a “de-escalation” scenario. The VIX falling below 20 and the Nasdaq’s historic 9-day winning streak suggest that traders believe the worst of the geopolitical shock is over. However, this optimism is built on fragile ground. The Strait of Hormuz remains effectively closed, and the economic damage from the energy shock is already manifesting, as seen in the collapse of Australian business confidence. The most significant test for this rally will come today with the release of the U.S. PPI report. If the data shows that the oil spike is rapidly feeding into broader inflation, it could shatter the market’s complacency, force a hawkish repricing of Fed expectations, and trigger a violent reversal.
Economic Calendar
Today is a critical data day, with the U.S. PPI report providing the first look at war-driven inflation.
Data Released Yesterday / Overnight:
- U.S. Existing Home Sales (Mar): Fell -3.6% to a 3.98M unit rate, missing consensus and highlighting the impact of higher mortgage rates.
- Australian Business Confidence (Mar): Plunged to -29, the lowest since the pandemic, a stark stagflationary warning sign.
- China Trade Data (Mar): Showed a sharp narrowing of the trade surplus, with imports surging and exports slowing.
Today’s Economic Calendar:
- European Session: Very light calendar.
- U.S. Session: The main event is the U.S. March Producer Price Index (PPI). The headline y/y rate is expected to surge to 4.6% from 3.4%, capturing the initial impact of the Iran war.
- Fed Speakers: A barrage of Fed officials are scheduled to speak, including Goolsbee, Barr, Barkin, Collins, and Paulson.
Asset Class Spotlight: FX, Commodities, Bonds & Crypto
The energy market experienced a sharp reversal. After surging above $104 on the naval blockade news, WTI crude plunged to settle below $100 a barrel from $104.03 to $98.12 is the most dramatic move of the session – as hopes for renewed peace talks overpowered immediate supply fears. The key question is whether this level holds or if oil continues to decline as markets price in a sustained reduction in geopolitical risk. Precious metals found a bid amidst the weaker dollar, with gold rising to $4,767.40 and silver jumping nearly 2.35% to $76.80. With inflation concerns easing, gold is finding support from the “lower rates, weaker dollar” narrative rather than from inflation hedging. This is a subtle but important shift in the gold narrative.
| Asset | Up/Down | Unit / % Change | Last |
| WTI Crude | -2.51 | -2.46% | 99.08 |
| Brent Crude | -4.16 | -4.02% | 99.36 |
| Gold | 20.00 | 0.42% | 4,767.40 |
| EUR/USD | 0.0037 | 0.32% | 1.1758 |
| USD/JPY | -0.07 | -0.04% | 159.32 |
| 10-Year Note Yield | -0.016 | -0.37% | 4.301% |
The U.S. dollar continues to weaken as the market prices in de-escalation, providing a significant boost to major peers. The market is now showing skepticism about dollar strength, with most forecasts expecting the USD Index (DXY) to trade between 92 and 98 in 2026, with a bias toward the low-90s by year-end.
- EUR/USD: The pair is rallying towards the 1.1760 level, hitting its highest point since early March. The euro is a major beneficiary of the “peace trade,” as an end to the conflict would alleviate the stagflation risks facing the energy-dependent Eurozone.
- GBP/USD: The pound surged above 1.3500. While the UK faces its own stagflation risks, the broad “Sell America” sentiment and hopes for a resolution are providing a strong tailwind.
- USD/JPY: The pair is drifting lower towards 159.30. The yen is finding some support from the weaker dollar and the prospect of easing energy prices, which would reduce imported inflation pressures for Japan.
Cryptocurrencies: Bitcoin surged past the $74,000 level, reaching a three-week high. The rally was driven by a combination of the “risk-on” mood in equities and massive purchases by MicroStrategy, which acquired another $1.28 billion worth of Bitcoin. However, ETF flow data showed significant outflows, suggesting that institutional investors were using the rally as exit liquidity. U.S. Treasury yields slipped slightly as the drop in oil prices provided a brief respite from inflation fears. The benchmark 10-year yield fell to 4.301%. However, today’s PPI report will be a critical test for the bond market.
Looking Ahead
Today’s trading will be dominated by the release of the U.S. March PPI report. This is the first major inflation print to capture the impact of the Iran war, and a hotter-than-expected number could shatter the market’s current complacency. If inflation is shown to be accelerating rapidly, it could force a hawkish repricing of Fed expectations, triggering a resurgence in the U.S. dollar and a sharp pullback in equities. Conversely, an in-line or soft report could be treated as confirmation that the inflation spike is manageable, providing further fuel for the ongoing rally. Traders must also remain hyper-vigilant for any headlines regarding the potential resumption of U.S.-Iran peace talks on Thursday.
What to Watch Today
- US PPI inflation data: The key theme this week is inflation expectations. If PPI comes in hot, it could undermine the “lower oil prices = lower inflation” narrative and trigger a reversal in bonds and equities. Conversely, if PPI comes in soft, it could validate the market’s new inflation narrative and support the equity rally.
- Negotiations could fail – If US-Iran talks stall or collapse, we could see a violent reversal in oil prices and equities. The downside tail risk is substantial.
- The blockade remains in place – Even if negotiations succeed, it will take time to normalize shipping flows. Oil prices could remain elevated until the blockade is lifted.
- Earnings season could disappoint – If corporate earnings miss expectations or if guidance is trimmed, the equity rally could reverse. The market is pricing in a best-case scenario, and any disappointment could trigger a selloff.