Geopolitical Relief Drives Risk On
Gains followed reports about possible progress in the US-Iran conflict. The Wall Street Journal said President Donald Trump was willing to end military hostilities even if the Strait of Hormuz stayed largely shut. The Dow opened near 45,200, hit about 45,900, and ended around 45,700. The 50-period exponential moving average supported the 5-minute chart, and the Stochastic RSI ended near 68. Tech led the rebound, with the Technology Select Sector SPDR Fund up 1.5%. Nvidia rose 1%, Microsoft gained 2%, and Oracle added 2.6% despite reports of layoffs in the thousands and a 27% year-to-date fall. Brent crude rose 4% to above $117 a barrel, and WTI climbed nearly 1% to above $103. Energy is up more than 12.5% in March, while industrials fell 10% and healthcare and communication services are down more than 9%.Macro Data And Key Catalysts Ahead
Consumer confidence rose to 91.8 from 91.0, above 87.9 expected. Present Situation increased to 123.3, Expectations fell to 70.9, US petrol topped $4 a gallon, job openings fell to 6.88 million, and Chicago PMI dropped to 52.8 from 57.7. Markets now await ADP (40K vs 63K), ISM (52.5 vs 52.4), retail sales, jobless claims, and Challenger cuts. NFP is forecast at 60K after -92K, but comes on Good Friday as US equity and bond markets are closed, delaying reaction until Monday 6 April. The market’s current stability is a stark contrast to the volatility we saw this time last year. Back in March 2025, the Dow was recovering from a correction scare around 45,700, driven by war headlines. Today, with the index trading calmly above 48,500, implied volatility is much lower, with the VIX hovering near 15 compared to the elevated levels seen during last year’s conflict. The geopolitical relief rally of 2025 shows how quickly sentiment can turn, creating opportunities for those positioned to sell volatility into panic. We are not seeing that same level of headline risk today, making options premium cheaper across the board. This environment suggests that buying protective puts is relatively inexpensive insurance against any unexpected shocks to the current calm. Technology’s leadership has only solidified since its bounce-back in March 2025, when names like Nvidia were just starting to recover. With NVDA now trading over $1,400, traders should consider using call spreads to participate in further upside while defining risk, as outright call buying is expensive. We should be wary of any weakness in these key leaders as a signal that the broader market trend is tiring. The energy sector provides the most dramatic year-over-year change, and our strategies must reflect that. Last year, Brent crude was trading above $117 per barrel on supply fears, making energy stocks the only clear winners. With Brent now stable around $85, the upside momentum is gone, and traders could use puts on the XLE ETF as a hedge against a potential global growth slowdown. Looking at the economic data, last year’s primary concern was surging inflation, with consumer confidence being shaken by gas prices over $4 a gallon. Today, with the latest CPI data showing inflation has cooled to 2.8%, the focus has shifted from inflation to the labor market’s softness. We should be positioned for the Federal Reserve’s response to slowing job growth, which could impact interest rate derivatives. This week’s Nonfarm Payrolls report is again scheduled for Good Friday, when markets are closed, mirroring the exact situation from 2025. This setup creates significant gap risk for the market open on Monday, April 6th. We should advise caution on holding large, unhedged positions over the long weekend, as any major surprise in the jobs number could cause a disorderly open. Create your live VT Markets account and start trading now.
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