Blog week ending, 2nd April 2026
Markets:
- Local and global stocks rebounded this week supported by growing hopes of de-escalation after President Trump signalled the US could exit the conflict in the next “two to three weeks”.
- OpenAI completed a record-breaking US$122 billion funding round, further fuelling market speculation around an Initial Public Offering.
- In local stock news, Alcoa Corporation’s ASX-listed shares rose strongly, after Iranian attacks disrupted operations at two Middle Eastern aluminium producers.
- Brent crude oil prices surged more than 55% during March, marking the largest monthly gain on record for the contract (used to price non-US oil) since its inception in 1988.
- Oil prices rose for the week but remained below US$100 a barrel, with volatility in pricing continuing amid shifting expectations around the conflict.
- The Aussie dollar rose as the US dollar weakened slightly on war de-escalation hopes.
Economics:
- Expectation around the RBA’s next policy move have risen, with some economists now forecasting up to three further rate rises over the remainder of the year.
- Minutes from the RBA’s March meeting highlighted a divided board reflected by the 5-4 vote for a hike. Members supporting the hike focused on inflation risks and were less concerned about the economic impact of the, whilst those opposing preferred to wait for greater clarity on the conflict’s effects.
- Australian home prices rose 0.7% in March, matching February’s pace. On an annual basis, prices are now almost 10% higher, with mid-sized capitals continuing to outperform both Sydney and Melbourne.
- Australian building approvals increased almost 30% in February to 19,022, rebounding from a 7.2% decline in January. The increase was driven by a surge in private sector multi-unit approvals.
- Westpac expects the war could generate a multi-billion-dollar windfall for Australia, as higher coal and gas prices boost export revenues over the five years to 2030.
- US Private businesses added a net 62,000 jobs in March, extending February’s upwardly revised 66,000 gains and exceeding expectations for a 40,000 increase. Employment growth remained concentrated in education and health services.
- US retail sales rose 0.6% in February, rebounding from a 0.1% decline in January and above forecasts of a 0.5% gain. The result marked the strongest performance in seven months.
- Euro area inflation climbed to 2.5% in March, up from 1.9% in February and slightly below expectations of 2.6%. This was the highest inflation rate since January 2025, driven largely by rising energy costs.
- Eurozone economic sentiment weakened in March, as higher inflation expectations linked to the Middle East conflict weighed heavily on consumer confidence.
- Eurozone manufacturing strengthened further in March coming in ahead of expectations and marking the strongest expansion in the sector since June 2022. Output growth reached a seven-month high.
- German inflation climbed to 2.7% in March, up from 1.9% in February and in line with forecasts. This represents the highest reading since January 2024.
- Minutes from the Bank of Japan’s last meeting showed policymakers debating the need for further rate hikes, amid rising concerns around stagflation risks.
- Japanese retail sales fell 0.2% in February, reversing January’s 1.8% growth and missing market expectations for a 0.8% gain, with higher costs weighing on consumer spending.
- Chinese manufacturing activity improved in March moving back into expansionary territory, while services indicators pointed to stabilisation. Employment, however, continued to decline.
- If central banks respond by adding more money into the financial system to calm markets, assets such as gold may benefit, even though short-term price moves can still be sharp.
Politics:
- The Australian government is preparing to introduce new powers to strengthen fuel security, considering a range of measures to safeguard domestic supply.
- The Australian Federal Government announced it will halve fuel taxes, aiming to ease cost-of-living pressures from higher energy prices on consumers.
- Iranian-backed Houthi rebels have entered the conflict while Iran has warned the US against any ground invasion. Reports suggest the Pentagon has been preparing for the possibility of extended ground operations in Iran.
- Pakistan, positioning itself as a mediator, has hosted talks with Saudi Arabia, Turkey, and Egypt toward an early end to the conflict. Iran’s President has reportedly signalled openness to ending the conflict, subject to guarantees.
- President Trump said Tehran has met most of America’s fifteen demands to end the war, though it remains unclear whether formal negotiations are underway. He also threatened to seize pr destroy Iran’s Kharg Island unless the Strait of Hormuz is immediately reopened, before telling the rest of the world that the Strait is no longer America’s problem.
Written by Christopher Lioutas
Chairman – Harbourside Investment Management
