From the studio

Video: Investors Club | Ceasefire implications, plus the alternatives playbook (7 mins)

Thought of the day

Global equities are on track for their best weekly gain in nearly a year, as the prospect of further de-escalation in the Iran war has boosted investor sentiment. The S&P 500 advanced for the seventh straight session on Thursday, its longest winning streak since October last year. Brent crude oil has fallen over 11% so far this week, and the 10-year US Treasury yield has declined by 5 basis points.

The cautious optimism may soon be put to the test. Today’s release of the US consumer price index for March will provide a first glimpse into the inflationary effect of higher energy prices since the start of the conflict. Fighting in the Middle East has continued despite the ceasefire agreement, with the Kuwaiti foreign ministry saying fresh drone attacks were carried out on Thursday by Iran and its proxies.

We maintain our constructive medium-term outlook for global equities, but are also mindful of potential risks. US inflation data, the peace talks, and tech earnings in the next days could all shape markets for the coming week.

US headline inflation should start to see the effect of higher oil prices. Consensus estimates call for an acceleration in the monthly headline inflation rate to 0.9% for March, from 0.3% in February, and a 0.3% rise in core inflation, which excludes energy and food. Larger-than-expected increases would likely lead to a further shift in investor expectations for Federal Reserve policy, especially as minutes from the central bank’s March meeting showed openness to rate hikes amid increased inflation concerns. Our view remains that fading tariff effects should lead to a cooling of sequential core inflation toward mid-year, while slower economic growth in the second half of the year and the vulnerability of the labor market should allow the Fed to cut rates further. We see another 50 basis points of easing later this year.

Whether the US-Iran talks will yield meaningful results remains unclear. Despite being “optimistic” about a deal ahead of Saturday’s negotiations, US President Donald Trump exerted further pressure on Iran, saying the Islamic Republic was doing a “very poor” job of allowing oil to pass through the Strait of Hormuz. Israel’s ongoing attacks against Hezbollah are also testing the ceasefire despite Prime Minister Benjamin Netanyahu’s willingness to hold talks with Lebanon. With significant differences between the US and Iran over several issues such as sanctions and nuclear programs, what the weekend talks will yield and whether the two-week ceasefire will hold remain to be seen.

Tech earnings may further test investor confidence in AI. Tech earnings bellwether TSMC will kick off the first-quarter earnings season next Thursday, and markets anticipate another set of results that beats expectations given tight chip supply and strong AI demand. This will be followed by big tech earnings later this month, when investors will scrutinize their monetization efforts and effectiveness. We maintain long-term conviction in the secular trend of AI, with rapid advance in both the capabilities and adoption of agentic AI reinforcing the positive growth outlook. We recommend diversified exposure across AI's value chain and geographies.

To navigate near-term uncertainty, we continue to advise investors to ensure the resilience of their portfolios by diversifying and hedging. We see value in short-duration quality bonds, gold, and broad commodities, as well as alternatives such as hedge funds for those able and willing to manage inherent risks such as illiquidity.