Chinese Tanker Passes the Strait Despite Blockade

In focus today

Focus continues to be in the Middle East with the US blockade of Iranian ports taking effect yesterday afternoon.

For market events, the US releases PPI in the afternoon, where the upwards pressure from February is expected to continue. Markets estimate PPI to increase 1.1% m/m SA, an increase from the already surprisingly high February figures of 0.7% m/m SA, as cost pressures from the oil supply shock continues.

We also get NFIB’s Small Business Survey from the US. The index fell for the second consecutive month in February to 98.8 and showed that both hiring plans and the number of job openings that companies were unable to fill had ticked lower already in February.

Today brings final Swedish inflation details. Last week’s preliminary print showed lower inflation than expected in March, driven by lower services, food and energy prices. Food and energy prices were expected to fall, but they fell more than expected. As for services inflation, we believe that travel prices may have contributed to the unexpected decline. Today’s details will hopefully provide further clarity on this. Furthermore, Riksbank first deputy Governor Aino Bunge will speak at 08.30 CET, discussing among other things the current economic situation.

Tonight, ECB’s Lagarde will speak at 23:00 CET and Fed’s Barkin will speak at 19:00 CET, where we will look for any signs of forward guidance.

Economic and market news

What happened overnight

In China, March exports increased 2.5% y/y (Jan/Feb: 21.8% y/y), sharply missing expectations of 8.3% y/y, while imports surprised to the upside and increased 27.8% y/y (Jan/Feb: 19.8%, cons: 11.2%). Note that the data is very volatile from month to month and exports were extraordinarily high in February alone at 39.6% y/y, so we expected to see some correction. However, the data still does not cover the full impact of the war in Iran and will likely weaken in the coming months.

What happened yesterday

In the Middle East, tensions escalated after the US 4pm CET deadline passed, with the US naval blockade of Iranian ports. US Central Command warned vessels that non‑compliance could lead to “interception, diversion and capture”. Despite the blockade, a sanctioned Chinese tanker appears to have been the first vessel to transit the Strait this morning. In response to the US blockade, Iran threatened retaliation against ports in neighbouring Gulf states. While NATO allies declined to participate in the blockade in the evening, Trump later said to reporters that he will reveal details today about countries that are willing to help in the Strait. According to media reports, in weekend talks, the US proposed a 20-year suspension of all Iran’s nuclear activity, while Iran would have conceded to 5 years. The fact that the two sides seem to be discussing the timeline, and apparently back-channel diplomacy has continued, we think a deal is possible but it will most likely require several rounds of talks, and meanwhile, the war could escalate.

In the Oil market, oil prices fell back below USD100/bbl overnight on the news that US and Iran might resume talks ahead of the end of the two-week ceasefire. Amid the additional US blockade of the Strait of Hormuz and an end to the Russian sanctions’ waiver that allowed purchasing of oil from Russian tankers already at sea, the oil market seems optimistic that supply constraints will start to ease in the short term. The waiver that allowed purchasing of Iranian oil is set to expire on 19 April, but its significance is reduced due to the ongoing blockade in the Strait.

In Hungary, newly elected Peter Magyar on Monday pledged to “restore the rule of law, plural democracy and the system of checks and balances”. With a two‑thirds majority in parliament, he said he would seek a constitutional amendment to cap prime ministerial terms at two.

Equities: What looked to be a muted opening in the futures markets turned out to be a solid rebound session in the US. The S&P 500 rose 1% and Nasdaq and the small-cap Russell closer to 1.5%. European and Nordic markets, which had started the day 1% lower, rebounded into the close, ending little changed.

One trigger for the rebound in equities, outside geopolitics, was the tech sector. US software rebounded a full 5.4% yesterday and companies like Oracle rallied 13%. Again, the trigger for this rebound is not entirely obvious; however, we think the approaching earnings season has something to do with it.

The US is expected to deliver another impressive quarter. Consensus looks for 12% earnings growth in Q1 for the S&P 500, with an impressive 9% coming from the top line. Tech is the standout, expected to print nearly 40% y/y earnings growth.

With this kind of stellar growth, we expect tech to come back into focus, but for different reasons than in the Q4 reporting season. AI monetization will admittedly be scrutinized, and consensus could be forced to lift its AI capex spend projections once again. All of this could admittedly trigger fear among investors, as has been the case over the last six months. However, the difference is that software multiples have already corrected to be closer to the market average. In fact, the global tech sector (including hardware) trades at more than a 15% discount to global industrials, although the former is expected to grow 40% in Q1 while industrials are barely expected to grow at all. Tech has seen massively lifted earnings estimates this year – 2026 earnings estimates are up 15% YTD – while industrials have seen no earnings upgrades at all. We think the surging earnings growth, on top of this unprecedented valuation discount, will capture investors’ focus.

FI and FX: The broad USD slipped and risk appetite improved after Trump indicated that peace talks will resume. In the US session, EUR/USD rose from 1.170 to 1.176 and has flat-lined overnight. EUR/SEK lost close to ten figures yesterday, mainly in the European session and thus repeated the time-zone pattern seen over the last many weeks. The cross then held steady around 11.80. EUR/NOK also dropped yesterday but has erased some of the losses overnight amid weaker oil prices – Brent crude is back below USD 100 per barrel. Global bond yields are generally lower while Japan’s 20y auction met strong demand fueling lower yields across the curve. US government bond yields are lower as well, where UST10y sits at 4.28%.