Week:

S&P500: +3.26% FTSE100: +4.79%  Gold: -1.72% Bitcoin: +3.26%

YTD:

S&P500: -3.60%  FTSE100: +4.96%  Gold: +8.10% Bitcoin: -21.23%

Markets Took a Break for Easter. The Problems Didn't.

Source: Connect Weekly | Week ending 6 April 2026

Five trading sessions. One enormous surge of hope. One sharp reversal. One jobs report nobody could trade. And a long Easter weekend to sit alone with your thoughts. This was not a week for the faint-hearted, and by the end of it, markets were right back where sentiment had no idea what to do, with WTI above $110, Iran standing firm, and a ceasefire deadline ticking down to Tuesday night.

What drove markets this week

The week started where March left off, in full-blown relief rally mode. President Trump's decision to step back from actively defending the Strait of Hormuz was the spark. The suggestion that Gulf and European allies could take responsibility for the world's most important 10 kilometres of water sent a jolt through every asset class simultaneously. Silver exploded 7% in a single session. Gold added 3%. Stock indices around the world piled in, and Brent crude dropped 3% on the spot. It was the kind of move that only happens when weeks of compressed short positioning unwinds all at once. The fact that month-end flows were also in play on March 31 made the numbers even more eye-catching, but the direction was unambiguous. For one day, at least, it felt like the worst was behind us.

April 1st kept the momentum alive, though the cracks were already visible if you looked carefully. Stocks extended gains to roughly 5% off their recent lows, pushing back above some key monthly downtrends in the process. ISM Manufacturing PMI beat for a third straight time, and dip-buyers used the technical breakout as cover to add risk. But the close was messy: profit-taking crept in, volumes thinned, and conviction never fully materialised. Trump's scheduled 9PM White House address hung over the session like a question mark. When he finally spoke, the message was neither catastrophic nor clarifying. The conflict would run a few more weeks beyond the original deadlines, but it would not spiral into something worse. Markets exhaled. Iran, meanwhile, stayed strategically vague. Pezeshkian's public tone was measured enough to keep diplomacy alive but firm enough to remind everyone that Tehran still held significant cards.

Then came April 2. Trump's Thursday address, a complete reversal of the conciliatory tone he had struck just days earlier, caught markets off guard. The five-week deadline for resolution was abruptly declared irrelevant. The peace trade was not delayed; it was cancelled. WTI surged 14% overnight, tagging $114 before retreating to just above $110. Equity markets gapped lower at the open as algorithms did what they are built to do: sell first, ask questions later. What followed was notable. Rather than a sustained slide, markets spent the rest of the session gradually recovering. Short-covering ahead of a long holiday weekend likely played a role, as did the broader sense that after roughly 10% corrections across major US benchmarks, there was not much incremental bad news left to price in. Major indices finished broadly flat on the day. Bonds were the real story. Yields fell sharply as the market began to price in the possibility that $110 oil does not just generate inflation; at some point it starts to weigh on growth as well. The Blue Owl credit stress situation, which had faded from the conversation, quietly crept back onto the radar. Precious metals came under pressure as commodity books were trimmed across the board, with Silver in particular unable to hold its earlier gains.

Good Friday was a non-event in the most frustrating possible sense. The March Non-Farm Payrolls came in genuinely strong: unemployment down to 4.3%, private payrolls up 186K against expectations of 60K, and wage growth a relatively contained +0.2% month-over-month. In isolation, that report tells a story of an economy holding together remarkably well under sustained geopolitical pressure. But with every major stock market shuttered for the holiday and futures liquidity essentially non-existent, there was no way to act on it. Traders spent the Easter weekend sitting with a difficult combination: solid economic data pointing one way, Middle East risk pointing another, and no ability to express a view until Monday at the earliest.

April 6 was cautious rather than cathartic. Markets returned from Easter to find the situation marginally less concerning than feared. Over the weekend, an F-15 had been downed by the IRGC, but both US pilots were recovered after an extensive search. Crucially, the rescue operation appeared to coincide with a temporary pullback in US bombardment activity and a renewed push for ceasefire talks. WTI barely moved, holding almost exactly where it had been on Friday, which in itself was telling. Equities nudged higher, BTC reclaimed $70,000 for the first time since March 26, and the sector heatmap was a patchwork of green and red with no clear theme. This was not buying with conviction; it was careful repositioning ahead of the April 7 8:00 PM ET deadline. The US Dollar softened against almost every peer. Whether that holds through the week depends entirely on what happens Tuesday night.

The NFP that the market cannot yet spend

The March jobs report deserves its own moment of attention even if markets could not react to it in real time. A 186K private payroll beat with unemployment at 4.3% is not the profile of an economy on the edge. It is the profile of an economy that has, so far, absorbed an oil shock, a war premium, and rising credit stress without cracking at the employment level. The Fed will see this and hold firm; rate cuts are not coming. What the report does not yet capture is the lag. Energy costs at these levels take three to six months to fully feed through into services prices, hiring decisions, and consumer confidence. The next two to three payroll reports will be far more revealing. For now, the labour market is the last major piece of the macro picture still holding up. If that starts to shift, the stagflation conversation moves from theoretical to urgent very quickly.

Looking ahead

Everything narrows to one moment: April 7, 8:00 PM ET. Iran has rejected the latest US proposal. The ceasefire odds that were quoted at 25% two weeks ago have not improved meaningfully. A US Marine fleet sits in the Arabian Sea. If no deal is reached by Tuesday night, markets will open Wednesday to a considerably more difficult conversation, one that prices escalation more seriously than it has to date. Oil moves first. Everything else follows.

Assuming Tuesday passes without a deterioration, the macro calendar takes over. US CPI on Wednesday is expected to print a headline +0.9% month-over-month, the most direct read yet on what sustained triple-digit crude does to American consumers. Core PCE on Thursday will be watched to see whether energy inflation is remaining contained or spreading into the broader price basket. FOMC Minutes from mid-March land on Wednesday too, and will be read carefully for any signal that the Fed is beginning to think about its next move. In Europe, Eurozone PPI and German CPI arrive mid-week, the first data to carry the full imprint of wartime energy prices on the continent. A significant beat raises the probability of an ECB emergency hike, currently priced at around 60%. Add in the RBNZ decision, the Canadian jobs report, and ISM Services on Monday, and this is a week that in any normal year would be the defining macro moment of the quarter. Right now, it is all secondary to whatever is or is not happening between Washington and Tehran.

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