Matt Britzman, senior equity analyst, Hargreaves Lansdown:“Yesterday was one of those sessions where it didn’t matter what you owned, chances are it finished in the red. Stocks slipped, bond prices dropped, gold lost its shine, and even parts of the commodities complex struggled as investors sent a clear message. Words alone aren’t cutting it right now, with President Trump’s extension of the pause on Iran energy strikes failing to lift the mood in any meaningful way. Tangible evidence of progress is what’s needed.
Perhaps the most telling move came from government bond markets, which also weakened through the session. Normally, when equity markets wobble, you’d expect bonds to act as a buffer as investors seek safety, but yields pushed higher as markets continued to price in inflation and interest rates staying higher for longer. We know the White House keeps a close eye on the bond market, so pressure will be mounting to secure a deal in the Middle East sooner rather than later.
FTSE 100 futures suggest a small rise at the open, although as we've seen plenty of times lately, that can change quickly. Fresh retail sales data showed volumes slipped 0.4% month-on-month in February, a smaller fall than expected, meaning activity has, for now at least, held on to much of its early-year momentum. But weakening consumer confidence is likely the more telling signal, with the GfK reading dropping to an 11-month low in March as households grapple with the twin threat of higher inflation and softer growth prospects. Markets are currently pricing around a 70% chance of a rate hike in April, but with sentiment already starting to wobble and growing risks to the growth outlook, a pause from the Bank of England could be the more measured prediction.
US markets had a tough day at the office, though futures hint at a modest clawback later today - as ever, though, we know sentiment can shift quickly before the opening bell. It did, however, serve as a useful reminder of why diversification matters. While tech stocks took a hefty tumble, the equal-weighted S&P 500 quietly finished the session broadly flat, suggesting the pain wasn’t as broad-based beneath the surface. Social media names were firmly in the firing line as investors digested a run of jury verdicts linked to mental health and child safety concerns. Both are hugely important issues with clear work still to be done, but yesterday’s narrative that this represents a “Big Tobacco moment” for the sector feels a little overdone.”
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