In focus today
Tensions in the Middle East continue to take focus, as uncertainty surrounding the two-week cease-fire gains momentum after no deal was reached in the talks over the weekend.
It is a quieter week for key market events. On Tuesday, the US releases PPI and Sweden publish its final CPI readings. On Thursday, we get the Q1 GDP and the monthly batch of data from China. Euro area final HICP is also due, while the US reports industrial production and manufacturing output. Throughout the week, several ECB and Fed officials are scheduled to speak.
Economic and market news
What happened over the weekend
In Hungary, Péter Magyar’s centre-right and pro-EU Tisza party beat Orban’s nationalist Fidesz party in Sunday’s parliamentary election. Viktor Orban conceded defeat after early results showed the opposition party leading with a projected two‑thirds majority in the 199‑seat parliament. Reported turnout at was record-high at 77.8% versus 67.8% at the previous parliamentary election. With Magyar’s election win, the uncertainty surrounding the EU’s aid packages to Ukraine and the next EU seven-year-budget is reduced, as there is a much smaller risk that Hungary will block or delay negotiations. Magyar, a former Orbán ally, campaigned on rebuilding trust with the EU and NATO, restoring the rule of law and joining the euro area by 2030. However, Magyar does not signal a clear break from Orbán’s approach, shares several core positions and he is not seeking an abrupt cut in ties with Russia or clearly advocating for the provision of military aid to Ukraine.
In the Middle East, the situation remains fragile as the US and Iran over the weekend failed to reach an agreement in peace talks in Pakistan, raising doubts about whether the two-week ceasefire will hold. Disputes especially regarding the Strait of Hormuz and Iran’s nuclear program appear to remain key sticking points. Iranian officials have not ruled out a second round of talks, even if no new date has been set. After the talks on Sunday, US President Trump announced that the US would launch a naval blockade of the Strait of Hormuz and destroy any mines that Iran had dropped in the Strait. Later, the US military’s central command confirmed that the blockade will take place beginning today at 4pm CET, and this morning, President Trump elaborated that the US would block ships entering or exiting Iranian ports. Iran’s Revolutionary Guards warned that any military vessel approaching the Strait of Hormuz would be treated as a ceasefire violation and met with a swift, forceful response, heightening the risk of serious escalation.
The oil market reacted swiftly to the breakdown of talks between the US and Iran over the weekend. Brent crude jumped back above USD100/bbl as the market has turned sceptical on the outlook for a near-term resumption of traffic through the Strait of Hormuz. It traded above USD110/bbl before the ceasefire announcement last week and there is a clear possibility it will rise back to this level of the sides does not restart talks the coming days.
In the US, March flash CPIs were released with headline inflation picking up as expected to 0.9% m/m SA and 3.3% y/y (Feb: 0.3%m/m SA, 2.4% y/y). The sharp increase is driven especially by energy prices that are up 10.9% m/m. Core CPI surprised slightly to the downside at 0.2% m/m against expectations of 0.3% m/m, due to softer services excl. shelter. Overall, it was a dovish report due to the steady development in core goods and services.
Norway’s March core inflation held at 3.0% y/y, below the 3.1% y/y consensus and in line with Norges Bank’s forecast, while headline inflation was 3.6% y/y, slightly higher than Norges Bank’s forecast at 3.5% y/y. The Norwegian wage settlement ended with a central pay raise that is expected to result in overall wage growth of 4.4% in 2026. This is at the upper end of our expectations but is marginally lower than what Norges Bank assumed in the monetary policy report in March. Hence, the outcome should be neutral for Norges Bank. With Norges Bank back in March guiding towards a hike at “one of the forthcoming monetary policy meetings”, the prints were regarded as more important than usual for the near-term pricing of May vs June as the most likely time for the first hike. With these prints the rate decision in May remains wide open, as markets are pricing approximately a 50/50 chance of a hike.
In Denmark, CPI increased to 1.2% y/y in March from 0.7% y/y in February, a sharp increase but slightly less than our 1.3% y/y forecast, as food prices continued their downward trend. Price surges on gasoline and diesel were especially the big inflation drivers in March.
Equities: Equity futures are pointing to an opening south of -1% today, mirroring the sell-off across Asia as the first round of negotiations between the US and Iran over the weekend failed. However, US markets were lower already on Friday, with the S&P 500 closing down -0.1% and HY credits -0.4%, despite solid inflation figures. In contrast, Stoxx 600 closed up 0.4% and OMX Nordic surged 1.3%, so we should expect a catch-down effect amplifying negative reaction in our markets today. Interestingly, the tech sector was one of the best-performing sectors in the US on Friday, despite software continuing to sell off. Semis could more than compensate for this weakness, however, which is interesting – and in line with our views, outlined in our equity strategy piece published last week. Materials and real estate also fared well, while it was defensive sectors like health care and staples selling off. Hence, risk appetite was fully visible throughout last week despite the negative closing.
FI and FX: Brent crude gap opens above US 100 per barrel on Monday morning after the US and Iran failed to reach an agreement over the weekend. Consequently, equities and equity futures are in red and the USD a bit stronger. US Treasury yields are modestly higher with 10y at 4.35%. EUR/USD trades at 1.1690, EUR/SEK sits at 10.90 after a 10-figure rebound in the US session on Friday and EUR/NOK starts the week at 11.15. The HUF is supported by the outcome in the Hungarian election where Orban was defeated. EUR/HUF drops almost 2% to just below 368, the lowest level since mid-2023.
