Ceasefire Extension Fails to Calm Markets Amid Prolonged Conflict Fears

GLOBAL MOOD: Cautiously Risk-On
Drivers: US-Iran Ceasefire Extension

Asia-Pacific markets opened in a risk-off mode on Wednesday as uncertainty over the trajectory of the US–Iran conflict weighed on sentiment. The extension of the ceasefire by US President Donald Trump, while signalling a willingness to keep diplomatic channels open, was interpreted by markets as prolonging the conflict rather than resolving it.

Investor confidence was further dented by Iran’s refusal to participate in talks, calling negotiations a “waste of time,” and the delay of high-level US engagement. The continuation of the US naval blockade reinforced concerns that tensions remain entrenched despite the pause in military action. This combination of stalled diplomacy and sustained pressure has heightened fears of a drawn-out standoff. 

TODAY’S WATCHLIST
 - RBI MPC Meeting Minutes
 - US Fed Waller Speech
 - ECB Lagarde Speech
 - Jan-Mar Earnings: L&T Tech, Tech Mahindra, SBI Life 

THE BIG STORY
US President Donald Trump has announced an indefinite extension of the ceasefire with Iran, just hours before its expiry, to keep diplomatic channels open and allow more time for negotiations. The move, reportedly at Pakistan’s request, marks a shift away from earlier threats of escalation, with Washington signalling willingness to pause military action until Iran presents a unified proposal. However, the extension appears unilateral, with no clear confirmation from Iran or Israel, leaving the durability of the truce uncertain.

Despite the diplomatic gesture, the US continues to maintain its naval blockade on Iran, which Tehran has labelled an act of war. Iranian officials have downplayed the significance of the ceasefire extension and reiterated their intent to challenge the blockade, highlighting the ongoing friction beneath the surface. The situation reflects a dual-track strategy—engagement through talks while sustaining pressure through economic and military measures.

On the policy front, attention is also shifting to the Federal Reserve, where nominee Kevin Warsh emphasised independence from political influence during his confirmation hearing. While he outlined a case for structural changes in policy approach, he avoided committing to rate cuts, even as expectations remain shaped by the broader macro environment. The intersection of geopolitical uncertainty and policy direction continues to define the near-term outlook for markets.

Data Spotlight
US retail sales rose sharply by 1.7% month-on-month in March 2026, beating expectations and marking the strongest growth in a year, driven largely by a 15.5% surge in gasoline sales amid higher fuel prices. Core retail sales also strengthened to 0.7%, indicating broad-based consumer resilience. Housing demand showed signs of recovery, with pending home sales rising 1.5%, supported by strength in the Northeast and South regions.

Labour market momentum remained firm, with private employers adding an average of 54,750 jobs per week, the highest since tracking began, signalling continued hiring strength.

On the energy side, crude inventories declined by 4.4 million barrels, reversing the prior week’s build, while distillates also fell, pointing to steady demand trends despite volatility.

Takeaway:
Strong consumer spending and resilient hiring highlight underlying economic strength, even as energy-driven distortions and mixed inventory trends reflect ongoing geopolitical impacts. 

WHAT HAPPENED OVERNIGHT

• US stocks decline as ceasefire doubts weigh despite late extension
  • Major indices fell around 0.6% as concerns grew over failure to secure US–Iran deal before deadline.
  • Sentiment hit by pause in Vice President JD Vance’s Iran trip amid lack of clarity from Tehran.
  • Late support emerged after Donald Trump extended ceasefire, awaiting unified proposal from Iran.
  • UnitedHealth surged over 8% after strong earnings and upgraded outlook.
  • Amazon gained over 1% following up to $25 billion investment in AI startup Anthropic.
  • Markets remain cautious despite selective stock-specific strength.
• US Treasury yield rise as inflation concerns and policy outlook remain in focus
  • The US benchmark 10-year yield rose to around 4.30%, but stayed below March peaks.
  • Higher oil prices amid West Asia tensions fuel inflation concerns, keeping yields elevated.
  • Uncertainty over US–Iran talks ahead of ceasefire deadline adds to risk premium.
  • Strait of Hormuz remains largely shut, sustaining energy supply risks.
  • Focus on Fed leadership outlook as Kevin Warsh signals need for policy reset.
  • Warsh advocates new inflation framework, balance sheet reduction and stronger communication.
  • Markets remain cautious on rate path amid mixed geopolitical and policy signals.
• US Dollar rises as ceasefire uncertainty boosts safe-haven demand
  • The US dollar index gained 0.36% to 98.43, reaching one-week high.
  • Strength driven by rising uncertainty over US–Iran ceasefire and potential delays in talks.
  • Iran yet to confirm participation in negotiations ahead of ceasefire expiry.
  • Conflicting signals around Vice President JD Vance’s travel add to market uncertainty.
  • Donald Trump administration actions, including tanker seizure, heighten tensions.
  • Euro weakens 0.44% against the dollar as risk sentiment turns cautious.
• Oil volatile as ceasefire extension and talk uncertainty drive swings
  • Brent crude prices rises 3% on the day, with post-settlement trading up $4.22 (4.4%) to $99.67 per barrel.
  • WTI settles up $2.52 (2.8%) at $92.13.
  • Prices briefly climbed above $100, hitting session high near $101.15.
  • Gains driven by uncertainty after Vice President JD Vance cancels Islamabad trip.
  • Donald Trump extends ceasefire, providing temporary relief.
  • Markets balance de-escalation signals with ongoing uncertainty over negotiations.
  • Oil continues to reflect rapid shifts in geopolitical risk premium.

Day’s Ledger*

Economic Data

• Japan Balance of Trade
• Eurozone Fiscal Data

Corporate Actions

• Jan-Mar Earnings: Amal, Bharat Coking, Delta Corp, Havells India, L&T Tech, Oracle Financial, SBI Life, Tata Comm, Tech Mahindra, Trent

Policy

• Fed Waller Speech
• ECB Elderson Speech
• ECB Lane Speech
• ECB Lagarde Speech
• RBI MPC Meeting Minutes

Tickers to Watch

• HCLTech net profit rises 4.2% to ₹44.88 billion, revenue up 12.3%
• Persistent Systems net profit rises 33.7% to ₹5.29 billion
• Nestle India's net profit rises 27.2% on margin expansion, volume growth
• SBI moves SC to review spectrum ruling, flags errors in IBC interpretation
• Karnataka HC extends stay on CCI case against Swiggy over data dispute
• Vikram Saha resigns as Deputy MD, board member of Can Fin Homes
• Adani backs lenders, opposes Vedanta's late bid in Jaypee insolvency case
• Oberoi Realty sees pronounced rise in Q4FY26 bookings at ₹16.73 billion Hindalco likely to replace Trent in Sensex in upcoming June rejig
  

Must Read

• Infra investments to grow 50% through FY28 despite West Asia crisis: Crisil
• India's crude imports fall 13% as Hormuz disruption cuts West Asia supply
• JD Vance likely to travel to Islamabad today for next round of peace talks
• Domestic production of oil, gas ramped up amid West Asia crisis: RBI Governor
• RBI Permits Card Issuers To Map Existing E-Mandates To Reissued Cards 

See you tomorrow with another edition of The Morning Edge.

Have a great trading day

India Turns Maritime Insurance Into Strategic State Power

India’s maritime insurance pool marks a strategic pivot from being a participant in global trade to a protector of its continuity, by bringing risk underwriting within the ambit of state capacity.

Srinath Sridharann writes, as supply chains become financially permissioned and geopolitics reshapes insurance markets, India’s move strengthens resilience, builds confidence in high-risk trade corridors, and signals its intent to shape, not just navigate, the future architecture of global commerce.

(*Compiled from various media sources)