MARKET WRAPS
European shares were up while oil edged higher but remained below $100 per barrel ahead of planned weekend talks between the U.S. and Iran.
"Investors appear to be looking ahead with cautious optimism--placing their bets on productive diplomatic talks expected to unfold in Pakistan this weekend," Tickmill Group said.
BNP Paribas Asset Management said global markets still face notable geopolitical risk under the fragile two-week cease-fire window.
Trump asked Israel to scale back attacks that were threatening the cease-fire. Israel has agreed to begin direct negotiations with Lebanon which are tentatively scheduled for next week.
Acknowledging the fragile nature of the Middle East cease-fire and risks of a short-term escalation to gain an upper hand in negotiations, Jefferies said phases of weakness offer buying opportunities for investors.
Economic Insight
While markets have scaled back bets for a rate rise from the European Central Bank on April 30 since the U.S. and Iran agreed a cease-fire, 58 basis points of rises are priced in by year-end, LSEG data show.
"What matters most at this stage is the stickiness of tightening expectations," ING said.
Meanwhile, U.K. retail footfall returned to growth in March, but the increase fell short of expectations ahead of a challenging period for retailers due to the conflict in the Middle East, according to a report from the British Retail Consortium and retail technology company Sensormatic.
U.S. Markets:
Stock futures were lower on the last trading day of the week as investors remained cautious ahead of discussions between the U.S. and Iran.
Investors now await CPI data due later on Friday for further clues on the Federal Reserve's policy rate path. The data is the market's first chance to see how last month's oil shock affected consumers.
Forex:
The euro fell. The currency could outperform low-yielding currencies, including the Japanese yen and Swiss franc, on expectations that the ECB will raise interest rates, ING said.
The dollar rose slightly as oil prices edged higher on concerns about restricted access through the critical Strait of Hormuz.
The greenback could be propped up if CPI data show U.S. inflation accelerated sharply in March following the recent rise in energy prices steaming from the Iran war, ING said.
"With hot inflation grabbing headlines, the bar for another dollar drop should be a bit higher today , even if Middle East developments remain the primary driver," it added.
Bonds:
Eurozone government bond yields edged lower in opening trade.
Uncertainty around the outcome of the Middle East cease-fire was likely to keep investors cautious, limiting the scope for further government-bond-yield spread normalization in the eurozone, Societe Generale said.
ECB rate hike prospects were expected to keep the 10-year Bund yield above 3%, it added.
Treasury yields were marginally higher in early trade. U.S. rates markets are moving from acute escalation risk toward a cautious holding pattern after the U.S.-Iran cease-fire, but confidence in durability remains limited, Societe Generale said.
Foreign investor demand at Treasury auctions weakened in March amid heightened geopolitical uncertainty and elevated volatility, Barclays said.
Energy:
Oil prices rose but remained below $100 a barrel ahead of negotiations between the U.S. and Iran this weekend.
"What gets agreed there, specifically whether a workable vessel transit protocol emerges, is the single variable that determines whether this backlog starts to clear," Kpler said.
Metals:
Gold prices fell in early European trading, though the metal remained on track for a weekly gain of 2% as investors awaited greater clarity from upcoming U.S.-Iran talks over the weekend.
The precious metal was likely to remain volatile in the short-term as investors react to shifting geopolitical signals, though the longer-term outlook is supportive, ING said.
Copper
Copper was little changed in early trade. Rising inventories are casting a pall over the market, ANZ said.
Iron
Iron ore futures declined in early trade. Prices were likely weighed by rising supply and doubts over demand prospects in China amid shrinking steel margins, Commonwealth Bank of Australia said.
EMEA HEADLINES
Porsche Deliveries Drop in First Months of Year
Porsche car deliveries fell 15% in the first quarter as the end of production of its petrol-powered 718 range and the discontinuation of tax incentives for electric and hybrid vehicles in the U.S. dented sales.
Strong deliveries of the fully electric Macan model following its market launch in the first quarter last year also skewed this year's figures, it said.
Raiffeisen Takeover Target Addiko Gets Higher Offer From Slovenia's NLB
Nova Ljubljanska Banka said it plans to launch a 565.5 million-euro ($661.6 million) takeover of Austria-headquartered Addiko Bank, escalating the contest for its southeastern European network a day after larger peer Raiffeisen proposed its own bid.
NLB, which is Slovenia's largest lender and previously attempted to buy Addiko in 2024, said late Thursday that it now intends to offer 29.00 euros in cash for each Addiko share. This represents a premium of nearly 12% to the stock's closing price on Wednesday, and is 26% higher than Raiffeisen's 23.05 euro-a-share proposal, which matched the six-month volume-weighted average.
U.K. Retail Sales Growth Miss Estimates
U.K. retail footfall returned to growth in March, but the increase fell short of expectations ahead of a challenging period for retailers due to the conflict in the Middle East, according to a report published Friday.
The number of visits to stores-comprising main-street shops, retail parks and shopping centers-for the five weeks to April 4 rose 2.4% from the same period a year earlier, the latest report from the British Retail Consortium and retail technology company Sensormatic showed.
Volkswagen to End U.S. Production of Its Only American-Made EV
Volkswagen will stop producing the ID.4 electric crossover at its Tennessee assembly plant, the latest casualty in the U.S. auto industry's retreat from EVs.
Production of the crossover will stop in mid-April as the plant prepares to change its higher-volume gas SUV, the Atlas, to the 2027 model year, the German automaker said Thursday. The ID.4 is VW's lone EV built in the U.S.
GLOBAL NEWS
U.S. Races to Keep Israel's Fight in Lebanon From Derailing Cease-Fire
The U.S. raced Thursday to keep Israel's war in Lebanon from derailing talks with Iran this weekend, with President Trump asking Israeli Prime Minister Benjamin Netanyahu to scale back attacks that were threatening a fragile cease-fire.
Israel said Thursday that it would begin direct negotiations with Lebanon after Trump delivered the stern message to Netanyahu in a phone call that a U.S. official said was shorter than their usual regular talks. Lebanese officials said they want talks that lead to a lasting peace but are first seeking an immediate pause in Israeli strikes that escalated in intensity after the Iran cease-fire was announced Wednesday.
Middle East Energy Shock Snaps China's Deflationary Streak
A surge in energy costs triggered by the war in Iran pushed up producer prices in China, snapping a streak of factory deflation in the country that lasted more than three years.
Japan to Release Extra Oil Reserves Amid Middle East Uncertainty
TOKYO-Japan plans to release an additional 20 days' worth of oil reserves starting in early May, Prime Minister Sanae Takaichi said Friday as the government tries to stabilize energy prices amid volatility caused by war in the Middle East.
While the U.S. and Iran recently agreed to a conditional cease-fire, concerns remain surrounding the Strait of Hormuz, a critical route for global energy shipments that has been largely blocked following the conflict.
Japan to Release Extra Oil Reserves Amid Middle East Uncertainty
TOKYO-Japan plans to release an additional 20 days' worth of oil reserves starting in early May, Prime Minister Sanae Takaichi said Friday as the government tries to stabilize energy prices amid volatility caused by war in the Middle East.
While the U.S. and Iran recently agreed to a conditional cease-fire, concerns remain surrounding the Strait of Hormuz, a critical route for global energy shipments that has been largely blocked following the conflict.
U.S. Races to Keep Israel's Fight in Lebanon From Derailing Cease-Fire
The U.S. raced Thursday to keep Israel's war in Lebanon from derailing talks with Iran this weekend, with President Trump asking Israeli Prime Minister Benjamin Netanyahu to scale back attacks that were threatening a fragile cease-fire.
Israel said Thursday that it would begin direct negotiations with Lebanon after Trump delivered the stern message to Netanyahu in a phone call that a U.S. official said was shorter than their usual regular talks. Lebanese officials said they want talks that lead to a lasting peace but are first seeking an immediate pause in Israeli strikes that escalated in intensity after the Iran cease-fire was announced Wednesday.
Xi Hosts Taiwan Opposition Leader to Draw Island Closer to China
TAIPEI-Chinese leader Xi Jinping welcomed the leader of Taiwan's main opposition party for a rare meeting in Beijing on Friday, leaning in to his campaign to steer the self-ruled democracy closer to China and nudge the U.S. to the sidelines.
Xi invited Nationalist Party Chairwoman Cheng Li-wun to China this week ahead of a mid-May summit with President Trump in which the Chinese leader could continue a push to dilute Washington's support for Taiwan.
Trump Once Talked Tough With China. Now He's Playing Nice.
(MORE TO FOLLOW) Dow Jones Newswires
04-10-26 0511ET
