Daily Market Outlook, April 20, 2026
Daily Market Outlook, April 20, 2026
Patrick Munnelly, Partner: Market Strategy, Tickmill Group
Risk sentiment deteriorated at the start of the week as renewed US-Iran tensions prompted a defensive market response, undermining expectations of near-term de-escalation in the Middle East. Crude led the move, with Brent rising 5.7% to $95.50/bbl, after reports that the US Navy intercepted an Iranian vessel over the weekend. The move followed a sharp escalation in regional friction, including Iranian fire on ships and renewed assertions of control over the Strait of Hormuz, a critical artery for global energy flows. Equity futures moved lower in response. S&P 500 futures declined 0.6%, reversing some of Friday’s optimism after the cash index had closed at a fresh record high. That earlier strength had been supported by Iranian comments suggesting the strait remained open. In Europe, futures pointed to an opening decline of roughly 1.2%. Across cross-asset markets, safe-haven positioning was mixed. Gold fell 0.8% to $4,790/oz, while silver slipped 1.0%. Bitcoin eased modestly to around $74,500. In rates, the US 10-year Treasury yield rose 2bps to 4.27%, while European bond futures traded weaker. In energy markets, European natural gas prices jumped as much as 11% after Tehran said over the weekend that it had again shut the strategic waterway, claiming a US blockade of Iran-linked shipping had violated the ceasefire. The latest moves follow a notably strong run for risk assets. As of Friday, the S&P 500 had posted a third consecutive weekly gain of more than 3%, putting the index on track for its strongest monthly performance since 2020. In Asia, equities in Taiwan, Singapore, and China’s CSI 300 recovered earlier losses linked to the late-February US and Israeli strikes on Iran.
The risk-on/risk-off dynamic driven by conflict headlines is unlikely to fade in the near term. That said, tomorrow’s Senate confirmation hearing for Fed Chair-designate Kevin Warsh could emerge as a competing focal point for markets, at least temporarily. Warsh is expected to face a particularly delicate communication challenge. A message perceived as overly hawkish risks frustrating a President who nominated him with expectations of a more accommodative policy stance. Conversely, a tone viewed as too dovish could unsettle markets by raising concerns over the credibility of Federal Reserve independence. Warsh is widely expected to rely on two main arguments in attempting to balance these competing pressures. First, he may emphasise the scope of accelerating balance sheet reduction, arguing that tighter policy via the Fed’s balance sheet could create room for a somewhat lower Fed funds rate while leaving overall financial conditions broadly unchanged, all else equal. The challenge with this argument is that balance sheet policy operates with long and uncertain lags, and any adjustment carries complex implications for market functioning and broader policy transmission. Second, he is likely to highlight the view that AI-driven technological investment could generate productivity gains sufficient to improve the economy’s growth-inflation trade-off. Under that framework, stronger productivity would imply a lower policy rate consistent with price stability for any given pace of economic expansion. There is some historical precedent for this argument: the late-1990s and early-2000s technology cycle did coincide with periods of productivity improvement that appeared to run somewhat independently of normal cyclical patterns. However, many participants in rates and inflation markets are likely to remain cautious if the policy message appears to lean too heavily on prospective productivity gains that have yet to be firmly demonstrated.
This week, central bank communication will be limited due to blackout periods ahead of upcoming policy meetings, with Lagarde's panel on "global challenges" on Wednesday being the highlight. In contrast, the UK macro calendar is busy, starting with the labour market report on Tuesday, which may give little insight into the economy's response to recent energy shocks. March CPI on Wednesday is expected to reveal a significant gap between headline and core inflation due to rising fuel prices. Thursday will see the release of March public finances figures, potentially leading to a minor revision of the DMO remit, followed by March retail sales on Friday. In the US and Canada, retail sales reports will also attract attention. The April flash PMIs on Thursday are anticipated to offer timely insights into the global macro impact of the energy shock, particularly regarding whether output is declining in line with reduced future expectations and if rising input costs are affecting output prices across sectors. The pressing concern for markets is whether the data indicates that the energy shock is evolving from a terms-of-trade issue into a more traditional growth-inflation squeeze, characterised by declining activity along with increasing pricing pressures.
Overnight Headlines
Economic Updates:
China maintained its Loan Prime Rates at 3.00% for 1-year and 3.50% for 5-year loans.
Japan's Tertiary Industry Index fell by 0.4% in February, slightly better than expectations.
New Zealand reported a trade surplus of NZD 698M in March, with exports reaching a record NZD 7.94B, driven by dairy and demand from China.
Iran Conflict:
The U.S. has seized an Iranian ship ahead of peace talks in Pakistan, with ongoing negotiations expected.
Iran claims control over the Strait of Hormuz, amidst increasing tensions and halted shipping traffic.
Economists warn that the impact of the Iran conflict will affect the U.S. even after hostilities cease.
Government and Central Banks:
China's unchanged LPR reflects growth concerns amid Middle Eastern risks.
New Zealand's export growth is notable, while the U.S. Energy Chief predicts gas prices may remain high.
The UAE has requested financial assistance from the U.S. during wartime.
Fixed Income News:
China plans to initiate special bond sales with a historic 30-year offering.
National Australia Bank is increasing credit provisions due to war impacts.
Foreign Exchange:
The Dollar-Yen remains stable near 159.00 amid U.S.-Iran tensions.
Commodities and Energy:
A strong El Niño could exacerbate the global fossil fuel crisis.
Oil prices surged following U.S. actions against Iranian ships, while gold prices fell due to inflation concerns.
Equities:
Asian hedge funds faced significant losses from the Iran conflict before a recent rally.
Defense stocks in Asia are seeing increased interest due to military buildups.
FX Options Expiries For 10am New York Cut
(1BLN+ represents larger expiries and is more magnetic when trading within the daily ATR.)
EUR/USD: 1.1750 (EU1.71b), 1.1600 (EU1.52b), 1.1700 (EU691.7m)
AUD/USD: 0.6650 (AUD723.9m), 0.6200 (AUD550m), 0.6875 (AUD543.9m)
USD/JPY: 151.00 ($405m), 160.00 ($363.6m), 159.00 ($308.6m)
GBP/USD: 1.3325 (GBP475m), 1.3500 (GBP434.4m), 1.3700 (GBP312.4m)
USD/BRL: 5.6060 ($323.7m)
USD/CAD: 1.3800 ($613.4m), 1.3600 ($546.6m), 1.3630 ($438m)
NZD/USD: 0.5800 (NZD455.6m)
CFTC Positions as of April 10, 2026:
Equity fund speculators increase S&P 500 CME net short position by 186,638 contracts to 414,897
Equity fund managers raise S&P 500 CME net long position by 71,259 contracts to 1,011,108
Speculators increase CBOT US 5-year Treasury futures net short position by 72,816 contracts to 1,625,745
Speculators trim CBOT US 10-year Treasury futures net short position by 23,259 contracts to 800,365
Speculators trim CBOT US 2-year Treasury futures net short position by 8,209 contracts to 1,703,806
Speculators increase CBOT US UltraBond Treasury futures net short position by 40,440 contracts to 300,823
Speculators increase CBOT US Treasury bonds futures net short position by 15,120 contracts to 74,116
Bitcoin net long position is 2,193 contracts
Swiss franc posts net short position of -34,097 contracts
British pound net short position is -54,724 contracts
Euro net long position is 26,018 contracts
Japanese yen net short position is -83,208 contracts
Technical & Trade Views
SP500
Daily VWAP Bullish
Weekly VWAP Bullish
Above 7000 Target 7200
Below 6950 Target 6850
DXY
Daily VWAP Bullish
Weekly VWAP Bearish
Above 98.60 Target 99
Below 98.50 Target 97
EURUSD
Daily VWAP Bullish
Weekly VWAP Bullish
Above 1.1720 Target 1.19
Below 1.1650 Target 1.1590
GBPUSD
Daily VWAP Bearish
Weekly VWAP Bullish
Above 1.3430 Target 1.3610
Below 1.34 Target 1.3290
USDJPY
Daily VWAP Bearish
Weekly VWAP Bearish
Above 158.50 Target 161
Below 157.30 Target 156.50
XAUUSD
Daily VWAP Bearish
Weekly VWAP Bullish
Above 4600 Target 5000
Below 4500 Target 4350
BTCUSD
Daily VWAP Bearish
Weekly VWAP Bullish
Above 73.5k Target 80k
Below 72.6k Target 70.5k
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!