EMEA Morning Briefing: Trump Mulls Ending War Without Reopening Hormuz

MARKET WRAPS

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CPI data for EU, France, Italy; U.K. GDP, balance of payments, Nationwide house price index, business investment; Germany unemployment; France consumer spending; no major corporate trading updates expected

Opening Call:

European stock futures advanced early Tuesday. Asian stock benchmarks were mostly lower; the dollar and Treasury yields edged lower; oil futures fell; while gold rose.

Equities:

Stock futures point to a higher open in Europe on Tuesday. U.S. stock futures jumped Monday evening, and oil prices reversed earlier gains following a report from the Wall Street Journal that President Trump has told aides he is considering ending the war with Iran, even without a deal to reopen the Strait of Hormuz.

Investors are concerned about a global recession triggered by a historic run-up in energy prices as prospects of U.S.-Iran negotiations on a cease-fire remain unclear.

"If a prolonged conflict means that we never get any more oil out of the gulf, we will absolutely have a global recession," said David Kelly, chief market strategist at J.P. Morgan Asset Management. "But I think both the U.S. administration and the Iranians will at some stage want to find an off-ramp."

Forex:

The dollar weakened slightly but may remain supported by fears over the global economic outlook amid a prolonged Mideast conflict. "We expect the war will likely last into at least June, and that will push up the USD," CBA's Joseph Capurso said.

Markets also noted Fed Chair Powell's comments on Monday that the central bank was inclined to hold rates steady and look past the energy shock from the war in Iran, However, he cautioned that the Fed might not be able to sit on the sidelines if rising prices shift the public's expectations about inflation over time.

Bonds:

Major oil-producing countries in the Middle East have been reducing their holdings of U.S. government debt since the U.S.-Israel war against Iran began on Feb. 28, to get more liquidity.

Custodial holdings, a proxy for foreign official demand, have dropped to the lowest levels since 2012, according to strategists at BofA Securities. These holdings have also fallen by $66 billion since the start of March, said BofA strategists Meghan Swiber and Eleanor Xiao.

Middle East oil exporters - which own around 3.5% of the total Treasurys held by foreign investors, or a little over $300 billion - may be contributing to this decline, they said. Saudi Arabia is among the major oil exporters in the Middle East that hold Treasurys.

Energy:

Crude oil prices trimmed earlier gains following the WSJ report that President Trump has told aides he is considering ending the war with Iran, even without a deal to reopen the Strait of Hormuz.

Meanwhile, in an incident highlighting tensions in Gulf waters, a Kuwaiti oil tanker was struck by Iranian forces while anchored off Dubai port in U.A.E., according to Kuwait state media, which cited Kuwait Petroleum Corporation.

"The bottom line is this is a geopolitical risk premium market, not a supply shortage market, and until that changes, volatility remains the dominant feature," FXCM's Russell Shor said.

Metals:

Gold gained. The precious metal's headwinds might remain in the short term due to the Iran conflict, including a strong dollar, more hawkish central banks, and investor outflows, said Alexandra Symeonidi at William Blair.

However, gold's appeal remains in place in the medium term, he said, adding that the price environment as well as diversification needs might encourage central bank buying in the second half of the year.

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Aluminum extended its gains amid recent attacks on Gulf aluminum plants, which threaten further disruptions to supply, ANZ Research analysts said. The effective closure of the Strait of Hormuz has forced customers to use their inventories, which are now largely eroded. "This has left the market with little buffer to cushion any supply shocks," the analysts said.

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Iron ore prices were rangebound at elevated levels, Nanhua Futures analysts said. Global demand for iron ore faces significant uncertainties as geopolitical tensions have driven up oil prices, heightening inflation risks and stalling the manufacturing recovery, Nanhua said. If tensions decelerate, lower oil prices may support demand recovery, it said.

TODAY'S TOP HEADLINES

Trump Tells Aides He's Willing to End War Without Reopening Hormuz

WASHINGTON-President Trump told aides he's willing to end the U.S. military campaign against Iran even if the Strait of Hormuz remains largely closed, administration officials said, likely extending Tehran's firm grip on the waterway and leaving a complex operation to reopen it for a later date.

In recent days, Trump and his aides assessed that a mission to pry open the chokepoint would push the conflict beyond his timeline of four to six weeks. He decided that the U.S. should achieve its main goals of hobbling Iran's navy and its missile stocks and wind down current hostilities while pressuring Tehran diplomatically to resume the free flow of trade. If that fails, Washington would press allies in Europe and the Gulf to take the lead on reopening the strait, the officials said.

China PMIs Signal Resilience as Mideast War Raises Uncertainty

A gauge of activity in China's sprawling manufacturing sector returned to expansion in March in part thanks to seasonal factors, but as the war in the Middle East raises supply shock risks, businesses are starting to feel the pressure.

China's official manufacturing purchasing managers index rose to 50.4 this month from February's 49.0, ending two straight months of contraction, according to data released by the National Bureau of Statistics.

Fed's Williams: Middle-East Developments Have Added Significant Economic Uncertainty

The Iran war will likely push inflation higher in coming months, a senior Federal Reserve official said Monday, but he signaled the central bank's current interest-rate setting gives it room to wait and see if those pressures last.

In a speech on New York City's Staten Island, New York Fed President John Williams said that the Middle East conflict has "added a great deal of uncertainty" and has already begun lifting prices. That effect would likely reverse after the conflict ends, Williams said. But he warned that while it persists, it could create a complex economic shock that could both fuel additional inflation and slow economic growth.

Wall Street Is Finishing the Worst Quarter for Stocks in Four Years

It was supposed to be a banner year for Wall Street. Now investors are just hoping to avoid a global recession triggered by a historic run-up in energy prices.

U.S. stocks are set to deliver their worst quarter in nearly four years. The tech-heavy Nasdaq composite lurched into correction territory on March 26, meaning it had fallen 10% below its recent high. A day later, the Dow Jones Industrial Average (a benchmark for the real economy) joined it.

Unilever Nears Deal to Create $60 Billion Food Giant With McCormick

Unilever is in advanced talks to combine its food business with spice-maker McCormick in a deal that would create a new food behemoth worth roughly $60 billion, including debt, according to people familiar with the matter.

A cash-and-stock deal could be announced as soon as Tuesday, when McCormick is set to report its latest quarterly results, the people said, cautioning that the plans could still slip.

CVS to Grow Store Footprint This Year With 60 New Locations

CVS Health is planning to open about 60 stores in 2026, growing its footprint for the first time after years of contraction.

The openings will include traditional stores, locations within Target stores and pharmacy-only sites, spokeswoman Amy Thibault said Monday.

Netflix, Eager for More NFL, Is Looking at a Four-Game Package

Netflix is ready for more football.

The streamer is looking to expand its current two-game package to four games, according to people familiar with the matter. It is interested in adding the National Football League's new Thanksgiving Eve game and an international game, likely in the season's opening week, those people said.

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Expected Major Events for Tuesday

04:30/NED: Mar Flash Estimate CPI

05:00/FIN: Feb Retail sales

06:00/UK: 4Q Business investment revised results

06:00/UK: 4Q Balance of Payments

06:00/UK: 4Q UK quarterly national accounts

06:00/DEN: 4Q Revised GDP

06:00/GER: Feb Retail Trade

06:00/GER: Feb Foreign trade price indices

06:00/UK: Mar Nationwide House Price Index

06:30/HUN: Feb PPI

06:45/FRA: Feb Housing starts

06:45/FRA: Feb PPI

06:45/FRA: Feb Household consumption expenditure in manufactured goods

06:45/FRA: Mar Provisional CPI

07:00/TUR: Feb Foreign Trade

07:00/TUR: Feb Employment / Unemployment

07:55/GER: Mar Labour market statistics (incl unemployment)

09:00/BEL: 4Q Balance of Payments

09:00/LUX: Feb PPI

09:00/CRO: Feb Industrial Production Volume Index

09:00/CYP: Feb PPI

09:00/GRE: Jan Turnover Index in Retail Trade

09:00/ITA: Mar Provisional CPI

09:00/ITA: Mar Cities CPI

09:00/POR: Feb Industrial production index

09:00/EU: Mar Flash Estimate euro area inflation

09:30/BEL: Feb PPI

10:00/ITA: Jan Industrial turnover

12:00/POL: 4Q Quarterly Balance of Payments

16:59/SPN: Feb Budget deficit

16:59/SPN: Jan Monthly Balance of Payments

16:59/SPN: Jan Budget deficit

16:59/SPN: Dec Budget deficit

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March 31, 2026 00:15 ET (04:15 GMT)

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