Market navigator:
week of 6 April 2026

What happened last week

• Iran conflict rattles markets: President Trump signalled the US military campaign against Iran could conclude within two to three weeks, while threatening to strike Iran's power grid should Tehran fail to reopen the Strait of Hormuz. The absence of a concrete exit strategy offset earlier equity market gains, with Brent crude surging 7.8% after Trump's national address amid renewed escalation fears.
• China PMIs return to expansion: Both the official manufacturing and non-manufacturing purchasing managers' indices (PMIs) returned to expansionary territory in March, rising to 50.4 and 50.1 respectively, beating consensus. However, input costs outpaced output prices across both sectors amid soaring raw material prices, pointing to broadening corporate margin pressure.
• European inflation surges: Euro area inflation jumped to 2.5% year-on-year (YoY) in March – its highest since January 2025 and up sharply from 1.9% in February, as energy prices swung from –3.1% to +4.9% YoY amid the Middle East conflict, albeit slightly below the 2.6% consensus. Encouragingly, core inflation eased to 2.3% and services inflation to 3.2%, suggesting the shock remains energy-driven.
• Mixed signals in US labour market: March non-farm payrolls (NFP) rose 178,000, above the 59,000 consensus, with construction and hospitality hiring recovering alongside returning healthcare workers. The unemployment rate edged down to 4.3%, though wage growth slowed to a five-year low. Iran war's impact on hiring is unlikely to materialise for at least two months and softening wages leave consumers exposed to surging energy costs.

Markets in focus

US equity rebounds from correction territory

US equities staged a sharp recovery last week, with the S&P 500 advancing 3.4% after briefly entering official correction territory. The Dow Jones index gained 3.0%, while the tech-heavy Nasdaq 100 outperformed with a 3.9% advance, as growing hopes of a Middle East ceasefire and solid economic data triggered a broad risk-on rotation.

Sentiment within the technology sector received a further boost from company-specific catalysts. Intel surged 16.8% after announcing a $14.2 billion deal to repurchase Apollo Global Management's 49% stake in its Ireland semiconductor facility. The move is widely interpreted as a signal of renewed confidence in its manufacturing turnaround and artificial intelligence (AI) foundry ambitions. SanDisk, which had previously been punished by speculation over reduced demand for memory chips following Google's TurboQuant algorithm release, rebounded 13.9% as buy-on-dip interest emerged.

Despite the weekly rebound, the broader market backdrop remains fragile. Equities continue to whipsaw on headline news flow, with sentiment dominated by fear – as reflected by the CNN Fear & Greed Index reading of 19, indicating extreme fear.

From a technical standpoint, the US Tech 100 index has held above its 20-day moving average (MA), which may signal an improvement in short-term momentum. However, it remains premature to conclude that the correction has run its course. While the index trades below the 200-day MA, the bearish trend retains the upper hand. The recent trough near 22,800 should provide near-term support, while the downward trend line represents resistance near 24,500.

Figure 1: US Tech 100 index daily price chart

Hang Seng snaps four-week losing streak

The Hang Seng Index (HSI) snapped a four-week losing streak, advancing 0.7% on the week. Sentiment, however, remained hostage to rapidly shifting Middle East headlines, oscillating between optimism and caution on a near-daily basis.

Southbound Stock Connect flows remained subdued, with net inflows of just HK$5.4 billion last week, suggesting limited conviction from mainland investors amid ongoing geopolitical uncertainty.

Newly listed AI names delivered sharp intraday swings. Zhipu AI and MiniMax surged 32% and 14% respectively on Wednesday, only to reverse sharply the following session – falling 15% and 10% – highlighting the speculative nature of investor positioning in early-stage AI listings.

Meanwhile, the People's Bank of China (PBoC) withdrew liquidity from the financial system for the first time in nearly a year, draining a net CNY890 billion via seven-day reverse repo operations in March and a further CNY250 billion through longer-term tools, including outright reverse repos and medium-term lending facility (MLF) operations. The measured pullback in monetary easing likely reflects the PBoC preserving policy firepower to address potential economic fallout from the ongoing Middle East conflict.

Technically, the HSI continues to oscillate between the 24,200 support level and the neckline of a potential double-bottom formation near 25,400, reflecting an absence of directional conviction in the near term. Until the index can clear the 200-day MA – currently near 25,750 – on a sustained basis, it would be premature to declare the corrective phase complete.

Figure 2: Hang Seng Index daily price chart

Nikkei posts worst month since the financial crisis

The Nikkei 225 suffered its worst monthly performance since October 2008, tumbling 13.2% in March – one of the steepest declines among major global indices. Despite the brutal March selloff, the index has rebounded 4.0% month-to-date, supported by volatile headline news flow and technical buying. Japan's acute vulnerability stems from its near-total dependence on Middle East energy supplies, with roughly 95% of crude oil imports sourced from the region and approximately 74% transiting the Strait of Hormuz. The scale of the dislocation is illustrated by Nikkei reports that Saudi Arabian crude prices for Japanese long-term contracts surged more than 80% between February and March alone.

Foreign investors accelerated their exit, with Ministry of Finance data showing a record net JPY4,862.3 billion in equity outflows in the week ending 28 March – sufficient to turn year-to-date flows negative after large net selling in the two preceding weeks.

Currency dynamics compound the pressure. As USD/JPY approaches the 160 threshold – historically a level that has triggered intervention – the Bank of Japan (BoJ) faces a difficult policy dilemma: a weak yen amplifies already elevated import costs, yet resuming monetary tightening into an oil-driven supply shock risks tipping a fragile economy into recession.

The Japan 225 index has experienced a peak-to-trough drawdown of approximately 16% triggered by the Middle East conflict. Since two weeks ago, it has been trading within a range of roughly 50,400–54,600 and is likely to remain range-bound absent any major headline developments. Traders should watch closely for a potential breach below the 200-day MA near 50,300, which would signal a reversal of the medium-term uptrend.

Figure 3: Japan 225 daily price chart

The week ahead

The week centres on inflation dynamics across two major economies, alongside a closely watched read on US consumer health.

In the US, March's consumer price index (CPI) release and February's personal consumption expenditures (PCE) price index – the Federal Reserve's (Fed) preferred inflation gauge – are both due this week. The March CPI print will likely command greater market attention, as it captures the initial impact of Middle East conflict-driven energy price pressures – a dynamic already evident in last week's elevated European inflation reading. A surprise to the upside could reignite expectations for Fed rate hikes this year and weigh on equity markets. Personal income and spending figures, alongside the University of Michigan consumer sentiment index, will provide a concurrent read on consumer resilience.

China's inflation data will test whether February's 1.3% YoY price growth – its strongest reading since January 2023 – marks a genuine reflation trend or merely a lunar new year distortion. Producer prices remain in contraction at –0.9% YoY, and while Beijing's recent measures targeting industrial overcapacity and monopolistic behaviour may gradually ease deflationary pressures, a sustained recovery in pricing power is far from assured.

Rounding out the week, Federal Open Market Committee (FOMC) meeting minutes will offer additional colour on policymakers' thinking as geopolitical uncertainty continues to cloud the outlook. In his recent speech at Harvard University, Fed Chair Powell indicated that interest rates are in a 'good place' to hold steady as the board assesses the impact of the oil price shock on the broader economy.

Figure 4: US inflation monthly trend

Key macro events this week

(In GMT+8 time zone)

Tuesday 7 April 2026

• 8.30pm — US durable goods orders MoM (February): previous 0%, consensus 0.4%

Thursday 9 April 2026

• 2.00am — US Federal Open Market Committee (FOMC) meeting minutes
• 1.00pm — Japan consumer confidence (March): previous 40.0, consensus 38
• 8.30pm — US core PCE price index MoM (February): previous 0.4%, consensus 0.4%
• 8.30pm — US personal income MoM (February): previous 0.4%, consensus 0.3%
• 8.30pm — US personal spending MoM (February): previous 0.4%, consensus 0.5%
• 8.30pm — US GDP growth rate quarter-on-quarter (QoQ) final (Q4): previous 4.4%, consensus 0.7%

Friday 10 April 2026

• 9.30am — China inflation rate YoY (March): previous 1.3%, consensus 1.2%
• 9.30am — China PPI YoY (March): previous –0.9%, consensus 0.4%
• 8.30pm — US core inflation rate MoM (March): previous 0.2%, consensus 0.3%
• 8.30pm — US core inflation rate YoY (March): previous 2.5%, consensus 2.7%
• 8.30pm — US inflation rate MoM (March): previous 0.3%, consensus 0.9%
• 8.30pm — US inflation rate YoY (March): previous 2.4%, consensus 3.4%
• 10.00pm — US Michigan consumer sentiment preliminary (April): previous 53.3, consensus 52.5

_{Source: Trading Economics, Nasdaq, LSEG (as of 5 April 2026)}