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What’s next, as peace hopes crumble?

The crisis in the Middle East with the US preparing to deploy additional forces to the region looks very vulnerable to say the least and earlier hopes of a ceasefire or even some sort of deal with Iran seem more unlikely. Meanwhile, US President Trump delayed planned strikes on Iran’s energy infrastructure by 10 days, again easing immediate fears of escalation, but leaving markets wary about a conflict now entering its fifth week. Stocks in New York closed lower, while Asian equity markets were mixed at the end of this week. European G7 foreign ministers warned that the war on Iran is having a catastrophic impact on the global economy, highlighted surging energy prices after extensive damage to refining and gas infrastructure in the Gulf and the shutdown of the Strait of Hormuz.

  • Date
  • Author Alessandro Fezzi, Content & Publications
  • Reading time 5 minutes

US aircraft carrier
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In Asian trading, South Korea’s KOSPI trimmed steep intraday losses to trade 0.5% lower and remained on track for a roughly 6% weekly decline, as heavyweight memory chip makers Samsung Electronics and SK Hynix stabilised after earlier falls of more than 4% but stayed set for weekly losses of between 7% and 10%. The chip sector weakness followed a sell-off in US peers after Google parent Alphabet unveiled its new "TurboQuant" compression algorithm earlier this week. Broader regional indices, including Japan’s Nikkei 225 and TOPIX, China’s CSI 300 and Shanghai Composite, Hong Kong’s Hang Seng and Australia’s ASX 200, mostly recovered from earlier declines and were heading for modest weekly moves.

US stock indices decline on persistent uncertainty over the Iran war 

Wall Street closed sharply lower on Thursday, despite President Donald Trump extending his deadline for strikes on Iranian energy infrastructure. The Dow Jones Industrial Average fell 1% to 45,960.11 points, the broad-based S&P 500 lost 1.7% to 6477.16 points and the technology-heavy Nasdaq 100 dropped 2.4% to 23,586.99 points, marking another low since September as semiconductor stocks suffered particularly heavy losses. Google parent Alphabet published research on a new approach to using memory more efficiently for artificial intelligence applications, raising concerns that booming demand for memory chips could moderate over time. 

Initial jobless claims in the US increased to 210,000 in the latest weekly reading published on Thursday, slightly above both economists’ expectations and the revised figure of 205,000 from the previous week. The modest rise points to a small softening at the margin, but claims remain low by historical standards and continue to signal a resilient US labour market. 

German consumer confidence deteriorates further

Sentiment among consumers weakened in April, according to a study published on Thursday by research institutes GfK and NIM, with the consumer climate index falling to minus 28.0 points from a revised minus 24.8 points in March, undershooting analysts’ expectations for around minus 27.3 points. While the Iran war has not yet had a visible impact on Germans’ willingness to spend or save, income expectations have declined markedly amid renewed inflation concerns linked to higher energy prices. Consumers now anticipate that rising energy costs will push inflation higher again and slow the country’s economic recovery, the institutes noted. The conflict has also weighed on economic expectations, with many households fearing that the tentative upswing in the German economy could suffer a serious setback, especially if the war proves prolonged.

Italian consumer sentiment hits fresh low

Italian consumer confidence fell sharply in March, with the ISTAT confidence index dropping to 92.6 from 97.4 in February, its weakest level since October 2023, well below expectations for around 95.5. The decline adds to concerns about the euro area’s third‑largest economy. The deterioration in morale is also politically negative for Prime Minister Giorgia Meloni, coming shortly after her defeat in a late‑March referendum on a key judicial reform, while the government still officially targets 0.7% growth for this year following 0.5% GDP expansion in 2025.

The EuroStoxx 50 fell 1.48% to 5565.93 points. This brought the eurozone’s leading index’s three-day winning streak to an end. The Swiss SMI once again held up relatively well, closing down 0.6% at 12,641.96 points.

Corporate and economic calendar

Corporate news in focus: Quarterly figures from BYD.

Economic data in focus: UK retail sales (08:00), Spanish Consumer Price Index (09:00), and University of Michigan Consumer Sentiment Index (15:00).

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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.

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