Oil prices lower as President Trump extended Iran deadline

US President Donald Trump issued a social media post yesterday stating that the US was in ‘productive conversations’ with Iran and that his threatened attack on Iranian power stations would now be postponed for five days. There was a sharp fall in oil prices and risk-on sentiment in markets elsewhere, though that optimism has waned on the back of push-back on Trump’s assertions from Iranian officials.

CPI inflation in Japan fell to 1.3% y/y, the slowest in nearly four years. Core inflation was at 2.5% y/y. Price growth is likely to pick up again in March however, given the higher energy prices that are feeding through to Japan. Meanwhile the composite PMI reading for March was at 52.5, down from 53.9 previously.

Foreign visitor arrivals to Türkiye fell 2.1% y/y in February, down from a 3.5% gain in January. Türkiye’s tourism sector is likely to come under pressure over the coming months given the conflict in the wider region, and flight search data suggests that growth in visitors will be weak or outright contractionary through the next several months.

Today’s Economic Data and Events

12:15 France manufacturing PMI, March. Forecast: 49.5

12:30 Germany manufacturing PMI, March. Forecast: 49.5

13:00 Eurozone manufacturing PMI, March. Forecast: 49.6

13:30 UK manufacturing PMI, March. Forecast: 50.0

17:45 US manufacturing PMI, March. Forecast: 51.3

Fixed Income

• USTs gained yesterday amid ceasefire hopes, with yields on the 2yr closing down 5bps at 3.8519%, the first close lower in five sessions. The 10yr was down 4bps to 4.3420%.

Currencies

• The dollar index fell 0.7% yesterday amid the general risk-on tone. EUR added 0.4% to 1.1613, while GBP closed 0.7% higher at 1.3431. JPY strengthened by 0.5% to 158.44.
• INR continued to slide, however, closing 0.3% weaker at 93.9763. Egyptian markets remained closed.

Equities

• US equities closed higher yesterday amid optimism around an easing of tensions. The S&P 500 added 1.2% while both the Dow Jones and the NASDAQ closed 1.4% higher.
• Locally, the ADX closed down 1.6% yesterday while the DFM ended 3.0% lower, with both indices closing before Donald Trump’s announcement. Saudi Arabia’s Tadawul ended Monday 0.6% higher.

Commodities

• Oil prices fell sharply yesterday after the social media post by Donald Trump increased optimism about an imminent end to the conflict. Brent futures fell by 10.9% to close at USD 99.9/b, the first sub-100 close since 11 March, while WTI closed 10.4% lower at USD 88.1/b. Push back by Iranian officials has seen prices pick up again this morning in early trading, but still not back to levels seen on Monday morning.
• Gold prices continued to tumble yesterday, with the spot price falling 1.5% to USD 4,407.2/troy oz, marking the ninth consecutive day of losses, with a 10th in progress already this morning.