After a relentless rebound, Wall Street has now erased its war-related losses. The S&P 500 chart has taken on the shape of a V for victory. That is a striking symbol, even if what victory might actually mean in the conflict between the United States and Israel on one side and Iran on the other remains far from clear. Militarily, the balance of power is obvious: Tehran can do little more than wage a form of guerrilla retaliation, whereas Washington can strike almost wherever it chooses. Yet that same asymmetry is also reflected in the economic fallout. Iran's ability to inflict financial disruption far exceeds the size of its economy. The United States, as its president likes to proclaim in his usual overblown fashion, is certainly capable of causing spectacular destruction inside the country. But it is constrained by the moral and political line that would be crossed by targeting civilians directly or indirectly, especially after failing to push the population itself into bringing down the regime.

That diplomatic backdrop allowed Tehran to evade matters during the talks held in Islamabad last weekend. Financial markets, however, do not believe that approach can last. That is the message conveyed by the rebound that began on Tuesday 31 March. There is also a second force at work, which I will come to shortly. A second round of talks is likely in the near term. Donald Trump said Iran had re-established contact for negotiations. His vice-president and point man in the conflict, JD Vance, said in an interview with Fox News that progress had been made, while adding that the real answer would have to come from Tehran because, in his words, "the ball is very much in their court". Iran would lose roughly USD 435 million a day, or USD 13 billion a month, if its ports were blockaded, according to Miad Maleki, a researcher at the Foundation for Defense of Democracies, as quoted by Le Grand Continent.

The market is therefore buying into the prospect of de-escalation. That can be seen in oil, with Brent falling back from USD 104 to USD 96 over the past few hours. It is also visible in US Treasuries, which have rallied, pushing yields lower. It is less evident in the dollar, which continued to weaken against the euro. All this comes as US Treasury Secretary Scott Bessent has taken a relatively unusual line on rates, telling Semafor that the Federal Reserve is right to hold steady for now and assess the consequences of the war…

What the market is also pricing in is the arrival of first-quarter earnings. The season looks set to be reasonably solid in the United States. Investors have responded by moving aggressively back into technology. At first glance, yesterday's leaderboard was slightly baffling because many reports last night talked about a fresh stampede into AI, even though not every AI-related stock actually surged. In reality, buyers focused above all on software names that have been badly beaten down in recent months: ServiceNow, Workday, Adobe, Fair Isaac and others. These are companies that have lost at least 30% of their value since 1 January, even though the Nasdaq 100 itself was back to break-even yesterday, up 0.5% for 2026. Investors also continued to buy names such as Dell and Intel. But 18 of the 20 biggest gainers in the Nasdaq 100 yesterday were stocks that had materially underperformed the index this year.

That appetite for risk may look dangerous at a time when AI is supposedly eating into the software sector, but in reality it reflects a short-term trade: first-quarter results are unlikely to show any real damage yet, regardless of whether one believes that damage will appear over the medium term. With expectations still relatively cautious, there is scope for a strong relief rally after the brutal sell-off in the stocks concerned. The pace of earnings releases will pick up somewhat today, although it will still be a little while before the first major tech results arrive. LVMH reported mixed numbers yesterday. Its New York-listed shares were down 3%, although they recovered part of their earlier losses after a much weaker start to the session. In Europe, Publicis, Sika and Givaudan are due this morning, with Kering to follow this evening. In the United States, attention turns to JPMorgan, Johnson & Johnson, Wells Fargo, Citigroup and BlackRock.

In Asia-Pacific, Wall Street's strong showing in technology is lifting Japan, up 2.3%, Taiwan, also up 2.3%, and South Korea, up 3%, all markets with heavy exposure to the sector. Australia, up 0.6%, and Hong Kong, up 0.3%, are more subdued. India is closed for a public holiday. Europe is expected to open higher, making up the ground lost in the previous session.

Today's economic highlights:

Today's agenda includes: in Australia, the Westpac Consumer Confidence Index and Consumer Confidence Change, followed by NAB Business Confidence; In China, the Balance of Trade, Imports, and Exports YoY; In Germany, Wholesale Prices YoY and MoM; In the United States, PPI and Core PPI MoM, followed by speeches from several Fed members and the API Crude Oil Stock Change; In the United Kingdom, BoE Gov Bailey's speech; In the Euro Area, ECB President Lagarde's speech. See the full calendar here.

  • GBP / USD: US$1.35
  • Gold: US$4,766.53
  • Crude Oil (BRENT): US$98.38
  • United States 10 years: 4.28%
  • BITCOIN: US$74,321

In corporate news:

  • Rio Tinto's shares reached an all-time high due to rising copper and iron prices.
  • GSK shared positive phase I trial results for its mocertatug rezetecan treatment in gynaecological cancers.
  • Pershing Square launched a combined IPO for its management company and a new fund, aiming to raise up to $10 billion.
  • Custodian Property Income REIT reported that its recently acquired Grove Court portfolio is performing in line with expectations.
  • Sika reports quarterly revenue impacted by the conflict in the Middle East.
  • Keurig Dr Pepper increases its stake in JDE Peet's to 97.75% following its takeover bid.
  • Nemetschek is set to acquire HCSS from Thoma Bravo.
  • Danieli has secured a €450 million contract from Marcegaglia for a steelmaking and flat-product rolling project in France.
  • The FDA has extended the approval of Travere (Novartis) for a rare kidney disease.
  • KKCG has increased its stake in Ferretti to over 23% following its partial offer.
  • The CEO of United Airlines, Scott Kirby, raised the possibility of a merger with American Airlines during a meeting with Donald Trump in late February, according to Reuters.
  • Booking confirms that hackers have accessed its customers’ data.
  • Venezuela and Chevron are set to carry out an “asset swap”, according to Javier La Rosa, a Chevron executive.
  • Hollywood stars are opposing the takeover of Warner Bros by Paramount Skydance.
  • Amazon is reportedly close to a deal with Globalstar to compete with Elon Musk’s Starlink network, reveals Bloomberg.
  • Bloom Energy will supply up to 2.8 GW of fuel cells as part of an expanded agreement with Oracle.
  • Today's key earnings reports: JPMorgan, Johnson & Johnson, Wells Fargo, Citigroup, BlackRock, Kering, Publicis, Givaudan, Sika…

See more news from UK listed companies here

Analyst Recommendations:

  • Hammerson Plc: Berenberg maintains its buy recommendation and raises the target price from GBX 409 to GBX 448.
  • Unite Group Plc: Berenberg maintains its buy recommendation and reduces the target price from GBX 774 to GBX 623.
  • Barclays Plc: BNP Paribas downgrades to neutral from outperform and reduces the target price from GBX 545 to GBX 485.
  • Lloyds Banking Group Plc: BNP Paribas maintains its neutral recommendation and reduces the target price from GBX 112 to GBX 111.
  • Hsbc Holdings Plc: BNP Paribas downgrades to neutral from outperform and reduces the target price from GBX 1500 to GBX 1450.
  • Keller Group Plc: RBC Capital maintains its sector perform recommendation and raises the target price from GBX 2050 to GBX 2270.
  • A.g. Barr Plc: Peel Hunt maintains its buy recommendation and raises the target price from GBP 7.70 to GBP 8.
  • Rathbones Group Plc: RBC Capital maintains its outperform rating and reduces the target price from GBX 2500 to GBX 2400.
  • St. James's Place Plc: RBC Capital maintains its sector perform recommendation and reduces the target price from GBX 1425 to GBX 1400.
  • Prudential Plc: Barclays maintains its overweight recommendation and raises the target price from GBP 13.30 to GBP 14.