Markets bounce back as deal hopes resurface

Summary

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Podcast Summary: Moving Markets – "Markets Bounce Back as Deal Hopes Resurface"

Date: April 14, 2026
Host: Bernadette and Dareko
Guests: Roman Canciani (Head of Product & Investment Content), Carsten Menke (Head of Next Generation Research)

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Episode Overview

This episode unpacks a turbulent 24 hours in the financial markets, with a focus on dramatic shifts triggered by US-Iran negotiations and ongoing Middle East tensions. Julius Baer experts provide their analysis on global equity movements, commodity price volatility, policy responses, and the sectoral winners and losers. The second half pivots to the cybersecurity sector, where the rise of artificial intelligence—especially agentic AI—introduces both major opportunities and existential threats.

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Key Discussion Points & Insights

1. Market Reactions to Geopolitical Volatility

• European Markets:
  • European equities dipped early after failed US-Iran talks and a US shipping blockade around the Strait of Hormuz.
  • Stoxx 600 closed only 0.2% lower after partial recovery.
    • Roman Canciani:

      "Initially, European stocks experienced a bit of a slip... but over the course of the day managed to bounce back somewhat, closing 0.2% lower." (01:26)

• US Markets:
  • President Trump's post-European market comments ("Iran had reached out, expressing a desire to negotiate a deal") flipped sentiment, propelling the Nasdaq to its ninth consecutive gain. Dow and S&P 500 moved into positive territory for the year.
    • Roman Canciani:

      "President Trump's comments after the close of trading in Europe really changed the narrative." (01:52)

• Asia-Pacific:
  • Optimism carried through overnight. South Korea's Kospi led with a 3% jump; Japan's Nikkei up 2.3%.
  • China was mixed: CSI 300 marginally up, but March export growth slowed to a six-month low; imports surged due to higher commodity/energy costs tied to Middle East disruptions.
    • Roman Canciani:

      "The overall picture suggests rising commodity and energy costs related to Middle East disruptions are starting to weigh on Chinese manufacturing." (02:24)

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2. Oil Price Swings and Commodities

• Initial news of shipping threats sent oil surging, with both Brent and WTI up ~6%, and Brent moving above $100/bbl.
• OPEC revised down its demand forecast, and Trump's comments cooled supply fears. Oil retreated below $100 overnight.
  • Roman Canciani:

    "Concerns about supply disruption were paramount. However, after the news broke that OPEC revised downwards its oil demand forecast... Oil prices started retreating..." (03:12)

• Commodity price increases are now directly impacting key exporters and manufacturers, especially China.

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3. Sector Performance: Winners and Losers

• Beneficiaries:
  • Defense (Rheinmetall, BAE Systems up)
  • Financials (notably Wise, thanks to cross-border transaction growth)
• Underperformers:
  • Telecommunications and healthcare lagged.
  • Luxury goods (LVMH's Gulf sales hit by conflict, shares down ~3%)
    • Roman Canciani:

      "Luxury goods giant LVMH offered a stark illustration of the real world impact. Their sales in the Gulf region were noticeably impacted by the conflict, with mall traffic dropping substantially." (03:59)

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4. Central Banks & Policy Responses

• European Central Bank (ECB):
  • Markets now price in close to three rate hikes by year-end to counteract inflation pressures from higher oil.
• US Federal Reserve (Fed):
  • Softer US housing data and hopes for a peace deal increase the chance of a 2026 rate cut (~36% probability).
  • 10-year US Treasury yields dipped slightly in response.
    • Roman Canciani:

      "Yesterday's weaker than expected US housing data, alongside the improved outlook for a potential peace deal, has notched up the probability of a rate cut by December to around 36%..." (04:51)

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5. European Regulation & Automotive Industry

• Germany is lobbying for more flexible EU vehicle emission rules to protect its auto sector, particularly against Chinese competition, and aims to have vehicles running on renewable fuels recognized as zero-emission.
  • Roman Canciani:

    "They're proposing that exceeding emissions targets shouldn't necessarily require complete offsetting. And advocating for recognition of vehicles running on renewable fuels as zero emission." (05:39)

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6. Key Events to Watch (Today’s Agenda)

• US Q1 earnings: JP Morgan Chase, Citigroup, Wells Fargo

  • Markets will scrutinize results but focus even more on CEO outlooks amid Middle East escalation.

• US Producer Price Index data

• IMF World Economic Outlook update

• Speeches from various central bankers

  • Roman Canciani:

    "It's going to be a busy day filled with potentially market moving information." (06:22)

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Expert Interview: AI and Cybersecurity (Carsten Menke, from [07:08])

AI's Double-Edged Effect on Cybersecurity

• Anthropic’s new 'cloudmethus' model promises to "revolutionize cyber defense" by identifying threats on an unprecedented scale—but also poses severe risks if abused.

  • Model not released to the public, but made available to selected cybersecurity providers as a cooperative, not adversarial, approach.
    • Carsten Menke:

      "It can identify cyber threats at an unprecedented scale. But at the same time, it could also develop strategies to exploit these threats if used by cybercriminals." (07:29)

    • Carsten Menke:

      "They have released the model to leading cybersecurity providers, which is signaling a cooperative approach, not a confrontational one." (08:05)

• AI has been integral to rapid threat detection, reducing breach risks and costs.

• The ‘cat and mouse’ nature of cybersecurity persists, with AI accelerating the creative destruction of legacy solutions.

  • Carsten Menke:

    "Cybersecurity has always been a cat and mouse game... Over time, established solutions have become obsolete because they could no longer cope with the evolving threat landscape." (08:41)

Sector Outlook and Investment Implications

• AI puts legacy cybersecurity providers at risk of falling behind, while those who embrace AI could significantly benefit.
• Rising threat sophistication is set to drive profits for sector leaders.
  • Julius Baer remains positive on cybersecurity, expecting volatility but also upside for innovators.
    • Carsten Menke:

      "...the need for more sophisticated solutions amid an ever increasing threat landscape should in fact push up the profits of the leaders. And this is why we remain positive for the cybersecurity theme, even though AI disruption headlines are likely to keep volatility elevated." (09:26)

Broader Software Disruption by AI

• There will be clear winners and losers as AI disrupts various software sectors.
• Mission critical, enterprise-embedded solutions (including leading cybersecurity firms) are expected to be more resilient.
  • Carsten Menke:

    "...those software segments which provide mission critical and enterprise embedded solutions, they should be more resilient. And of course this includes leading cybersecurity solutions." (10:06)

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Memorable Quotes

• Roman Canciani [01:52]:
  "President Trump's comments after the close of trading in Europe really changed the narrative."
• Carsten Menke [08:41]:
  "Cybersecurity has always been a cat and mouse game."
• Carsten Menke [10:06]:
  "...those software segments which provide mission critical and enterprise embedded solutions, they should be more resilient."

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Key Timestamps

• 00:01–01:16 — Introduction and market set-up
• 01:16–06:22 — Global markets, oil, sector moves, central banks, regulation
• 06:22–07:08 — Today’s economic events preview
• 07:08–10:37 — Carsten Menke on AI, cybersecurity sector impacts, market/industry outlook
• 10:37–End — Wrap-up

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Takeaways

• Markets remain hypersensitive to geopolitical signals, swinging between fear and optimism based on diplomatic updates.
• Commodity and energy price volatility is flowing directly into sectoral and regional equity performance.
• Central bank paths are diverging, with the ECB likely to tighten further and the Fed’s next steps increasingly data- and event-dependent.
• In cybersecurity, AI is hastening the pace of disruption, favoring adaptive innovators over legacy incumbents—a theme with long-term investment implications.

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For more in-depth policy implications or sector analysis, listen to the full episode or check Julius Baer’s research reports.

Transcript

[A]

Welcome to the Moving Markets podcast on Tuesday 14th April with me, Bernadette and Dareko. I'm looking forward to catching up on the latest financial markets news with Julius Baer's head of product and investment content, Roman Canciani this morning. And then we'll be joined by our head of Next Generation Research, Carsten Menke, to talk about cybersecurity. There have been a lot of headlines on the topic recently. We're going to focus today on the ones associated with artificial intelligence. So stay tuned for that foreign. And before we get into today's podcast, I'd also like to draw your attention to the most recent View beyond podcast that was published over the weekend in which Richard Tang, our China strategist and head of research, Hong Kong, spoke to Hong Hao, the CIO of Lotus Asset Management, to assess the implications of the latest events in the Middle east for markets. The conversation also covers China's economic momentum and the role of defensive value and high dividend stocks in the region. So it's a great listen, especially if you've got interests in China. It's called what the Fragile Middle East Truce Means for China. So look it up. Now, though, let's catch up with the main market news from the last 24 hours. Good morning to you, Roman.

[B]

Good morning, Bernadette.

[A]

Well, it was a volatile start to the week, wasn't it? Why don't we begin with European markets and how they reacted to the failed talks between the US And Iran over the weekend?

[B]

Well, initially, European stocks experienced a bit of a slip. The failure of US Iran talks, coupled with the US Announcing a blockade around the Strait of Hormuz certainly rattled nerves. The Stoxx 600 dipped, but over the course of the day managed to bounce back somewhat, closing 0.2% lower. However, things then shifted indeed, and we

[A]

saw a surprising turnaround in US Markets. So what fuelled the sudden shift in sentiment?

[B]

Well, President Trump's comments after the close of trading in Europe really changed the narrative. He indicated that Iran had reached out, expressing a desire to negotiate a deal. That sparked a wave of optimism, pushing the Nasdaq to its ninth consecutive gaining session. The Dow and the S&P 500 followed suit. And importantly, both the Dow and The S&P 500 actually moved into positive territory for the year.

[A]

And that change in sentiment carried on overnight. Right. So perhaps you could give us a quick overview of what happened in Asia.

[B]

Well, largely, yes, most Asia Pacific markets are higher this morning. Based on those continued hopes for a diplomatic solution, South Korea's Kospi has been leading the gains, jumping about 3%. Japan's Nikkei also performed well, up 2.3%. However, China painted a slightly different picture. While the CSI 300 edged higher, the country's export growth slowed considerably in March, hitting a six month low. Imports did expand at their fastest pace in over four years, but the overall picture suggests rising Commodity and energy costs related to Middle east disruptions are starting to weigh on Chinese manufacturing.

[A]

Okay, you mentioned commodity costs there, so let's talk about oil. Oil prices were particularly volatile. Perhaps you could talk us through what happened there.

[B]

Absolutely. Initially, the threat to shipping lanes sent oil surging in the morning price breaching the 100 USD mark quite markedly. Both Brent and WTI jumped around 6% during trading. Then concerns about supply disruption were paramount. However, after the news broke that OPEC revised downwards its oil demand forecast, citing that high prices were already dampening consumption. Oil prices started retreating, bringing Brent back down closer to the 100 USD level again. And overnight oil fell further. On President Trump's comments, currently it is trading around.

[A]

All right, why don't we talk about some specific sector performances? Were there any specific sectors feeling the pinch or benefiting from these developments?

[B]

Definitely. In Europe, defence stocks predictably benefited, with companies like Rheinmetall and BIA Systems seeing their share prices climb. Financials also received a boost, notably wise thanks to strong cross border transaction volumes. Conversely, telecommunications and healthcare lacked with Dutch telecom experience creating a price target cut. Luxury goods giant LVMH offered a stark illustration of the real world impact. Their sales in the Gulf region were noticeably impacted by the conflict, with mall traffic dropping substantially. Their shares closed down about 3% in the US.

[A]

Okay, changing tack a bit. We're only a couple of weeks away from the next ECB and FOMC meeting, so it's a good time to touch on monetary policy. Are central banks reacting to this increased inflationary pressures?

[B]

They absolutely are monitoring the situation closely. The heightened oil prices add another layer of complexity to the inflation outlook. In Europe, markets are currently pricing in almost three rate hikes from the ECB by year end. Simultaneously, we are seeing a slight recalibration in expectations for the Federal Reserve. Yesterday's weaker than expected US housing data, alongside the improved outlook for a potential peace deal, has notched up the probability of a rate cut by December to around 36% overnight again, U.S. treasuries rallied modestly yesterday, reflecting this shift in expectation.

[A]

Interesting. Okay, but then, looking beyond this immediate crisis, I noticed something regarding automotive regulations in Europe. Could you elaborate on that?

[B]

Certainly Germany is actively lobbying for more flexibility in EU vehicle emission rules. They want to ensure their domestic car industry remains compet, especially given the growing challenge from China. They're proposing that exceeding emissions targets shouldn't necessarily require complete offsetting. And advocating for recognition of vehicles running on renewable fuels as zero emission. It highlights the ongoing tension between ambitious climate goals and the need to protect industrial interests.

[A]

Yeah, delicate balancing act to say the least. Okay then, Roman. Finally turning to today, what key events should our listeners be paying attention to?

[B]

Today is packed. We have earnings reports coming from major US banks, JP Morgan Chase, Citigroup and Wells Fargo. Analysts will be scrutinizing their performance, but perhaps more importantly, listening carefully for CEOs assessments of the economic landscape and the potential impacts of the Middle east situation. Alongside those earnings, we have the release of US Producer Price Index data, plus speeches from numerous central bankers. And finally the IMF will be releasing its updated World Economic Outlook outlook. So it's going to be a busy day filled with potentially market moving information. That's it from me.

[A]

Great. Thanks for the news update this morning, Roman.

[B]

Thank you very much. Violet, always a pleasure.

[A]

So now it's time to talk to you. Carsten, good morning to you.

[C]

Hello, good morning.

[A]

So we said we're going to talk about AI and cybersecurity. While headlines during the past weeks have been dominated by the Iran war, progress in AI, of course is not stalled. And Anthropic in particular has been very busy releasing new and quite impressive models.

[C]

Yeah, that's absolutely right. Remember, the disruption of established software businesses by agentic AI was the dominant topic in financial markets before the start of the war. And yes, Anthropic's cloudmethus has attracted a lot of the attention as of late. It promises to revolutionize cyber defense. According to its developer, it can identify cyber threats at an unprecedented scale. But at the same time, it could also develop strategies to exploit these threats if used by cybercriminals.

[A]

And is that the reason why they won't release it to the public?

[C]

Yes, that's my understanding. However, they have released the model to leading cybersecurity providers, which is signaling a cooperative approach, not a confrontational one. What is also important, AI, is nothing new for the cybersecurity industry. Already during the past few years, it has become instrumental in improving security. AI enables companies to uncover attacks much faster, which drastically reduces the risk of a major breach or lowers its costs.

[A]

So what do you think this is all going to mean then for the cybersecurity industry?

[C]

Well, firstly, the news confirms Our view that AI is both a blessing and a curse for the cybersecurity industry. It has a history of facing and fending off new and more sophisticated attacks, and with attackers often one step ahead of the defenders. Cybersecurity has always been a cat and mouse game. Secondly, the history of cybersecurity is also one of creative destruction. Over time, established solutions have become obsolete because they could no longer cope with the evolving threat landscape. So there is quite a long list of companies that once were leaders, but which have meanwhile disappeared.

[A]

And I assume that this is set to continue.

[C]

Exactly. So with the advent of AI, enriched cybersecurity providers of legacy solutions risk falling behind further, while those that embrace it are much more likely to lead. Of course. And the need for more sophisticated solutions amid an ever increasing threat landscape should in fact push up the profits of the leaders. And this is why we remain positive for the cybersecurity theme, even though AI disruption headlines are likely to keep volatility elevated.

[A]

Okay, and on the software disruption by AI agents more broadly, we've talked about this before, but what's your guiding principle again?

[C]

So firstly, as with any transition, basically there will be winners and losers, so there's definitely no doubt about that. And then secondly, we believe that those software segments which provide mission critical and enterprise embedded solutions, they should be more resilient. And of course this includes leading cybersecurity solutions.

[A]

Carsten, it's a fascinating topic and I'm sure there's going to be plenty more headlines to come and more for us to talk about in future podcasts. Thank you so much for joining the show today.

[C]

Thanks for having me. Bye.

[A]

Well, that's it for today's podcast. Thank you all for listening and of course thanks to Roman and Carsten for their briefings today. Please do tune in again tomorrow when Helen Frear will be back hosting more of our experts to discuss what's moving market. So don't miss that. Meanwhile, good luck today and goodbye for now.

[B]

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