Market developments
Equities: Global equity markets surged to record highs this week, driven by mounting optimism that the Iran war may be nearing an end. The MSCI All Country World Index rose for a 10th consecutive day of gains, the longest winning streak since September. The S&P 500 jumped on Friday after Iran declared the Strait of Hormuz “completely open” for commercial traffic, extending a five-day advance that pushed it back over January’s record high and toward its biggest monthly gain since 2020.
Fixed Income: Fed officials remained divided, with Governor Stephen Miran advocating for three or four rate cuts this year, stating “I still don’t see a very convincing reason for waiting,” while St. Louis Fed President Alberto Musalem said rates should likely stay at current levels for some time given inflation risks from higher oil prices. European Central Bank policymakers were leaning toward keeping rates unchanged this month, postponing their verdict on whether the Iran war fallout warrants a response.
Commodities: Commodity markets experienced dramatic volatility, with oil prices plunging on Friday after Iran’s announcement about the Strait of Hormuz reopening. Gold rose this week, supported by softer oil prices that eased inflation concern, while copper extended its advance, erasing losses brought on by the more than six-week war in the Middle East.