Risk‑off mood returns as oil rebounds and uncertainty lingers

Summary

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Moving Markets – Risk‑off mood returns as oil rebounds and uncertainty lingers

Date: May 8, 2026
Host: Helen Frear (A)
Guests: Lucia Ciacilovic (B), Tim Gagie (C)

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Episode Overview

This episode of Julius Baer’s Moving Markets podcast focuses on the recent return of a risk-off mood in global markets, driven by renewed geopolitical uncertainty in the Middle East, volatile oil prices, and diverging central bank moves. Expert analysis covers equities, fixed income, commodities, FX, and Asian market performance, with a special look ahead at key economic data releases.

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Key Discussion Points and Insights

1. Geopolitical Uncertainty and Market Sentiment

• Persistent Uncertainty: The session was dominated by speculation over a possible US-Iranian agreement to end regional conflict. Optimism faded with no concrete news, fueling a risk-off atmosphere.
  • Quote (Lucia, 00:51): “Investors were left guessing and that sense of uncertainty translated into a clear risk off mood. Early optimism faded quickly as there was no concrete confirmation of a deal.”
• Market Impact:
  • Equities, bonds, and commodities showed caution and volatility.
  • Headlines and rumors drove continuous market jitters.

2. European Market Response

• Negative Close: The Stoxx 600 fell over 1%, with all major European indices (UK, France, Germany, Italy) finishing in the red.
  • Quote (Lucia, 01:17): “It was a broad based pullback, reflecting investor caution rather than company specific news.”

3. Central Bank Divergence

• Norway: Norges Bank raised its policy rate by 25bps to 4.25% in response to rising energy prices and strong domestic demand.
• Sweden: The Riksbank held rates at 1.75% amidst subdued domestic inflation, staying cautious due to global uncertainties.
  • Quote (Lucia, 01:58): “Their respective stances are quite different actually... [Norway] clearly prioritizing tackling inflation... [Sweden] opting to wait and see.”

4. US Market Movements

• Equity Rebound and Retreat: S&P 500 reached a new intraday high, then ended down 0.4% as oil rebounded. Tech (Amazon, Broadcom, Micron) was a drag.
  • Quote (Lucia, 02:45): “The S&P 500 briefly reached a new all time intraday high. But momentum faded as oil prices bounced back...”
• Treasury Yields Rise: US 10-year at 4.39%, 30-year near 5%. Geopolitical risks (especially the Strait of Hormuz) feeding into inflation & rate expectations.
  • Quote (Lucia, 03:13): “US treasury yields moved higher... Investors are closely watching how developments in the Middle East could feed into inflation expectations…”

5. Commodities: Oil and Gold

• Oil:
  • Volatile session—initial dip on peace rumors, strong rebound later.
  • WTI back over $95, Brent >$101, holding those levels into the morning.
• Gold:
  • Steady rise, on track for weekly gains as investors hedge uncertainty.
  • Quote (Lucia, 03:49): “Investors appear to be holding on to hopes of an eventual peace deal even as renewed hostilities underline that uncertainty is high.”

6. Macro Backdrop: US Economic Data

• Mixed Signals:
  • Initial jobless claims up to 200,000 (still below expectations).
  • Productivity +0.8% Q1 (miss), unit labor costs +2.3% (below est.).
  • Layoff announcements rose 38% in April, tech/AI leading cuts, but total layoffs still much lower year-over-year.
  • Quote (Lucia, 04:30): "The picture was mixed... Challenger data showed that layoff announcements jumped 38% in April with artificial intelligence related cuts leading the way.”

7. Asia Pacific Markets

• General Weakness: Japan’s equities slipped post-record highs due to profit taking and Toyota’s weak profit (affected by US tariffs), court rejection of Trump-era tariffs noted.
• China, Hong Kong, India: Traded lower.
• South Korea (KOSPI 200): Exception—trading up nearly 90% year-to-date.
  • Quote (Lucia, 05:22): “The notable exception was South Korea where the KOSPI 200 was trading in positive territory. And Helen, it is now up around 90% year to date.”

8. What’s Next: Key Data Releases

• Early German export data surprised to upside; industrial output missed.
• Next focus: US April Nonfarm Payrolls, average hourly earnings, unemployment rate, preliminary University of Michigan sentiment (May).
• US futures indicated higher open at the time of recording.

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FX & Metals with Tim Gagie

1. Metals Market Dynamics (07:06–08:21)

• Volatility Linked to Oil and Geopolitics:
  • Silver surged nearly 15% in two days, dubbed “turbocharged gold.”
  • Gold moved higher more steadily, $4,500 seen as strong support.
• Positioning Advice:
  • Stay long gold unless aiming for short-term trades.
  • Consider reducing profitable silver positions due to rapid gains and reversibility potential.
  • Quote (Tim, 07:16): “Silver reaffirmed its role as turbocharged gold, jumping almost $10 in a couple of days, not far off 15%... In gold I would stay long... but in silver I think I might want to lighten up a bit on positions in case this move is not sustainable.”

2. Dollar Trends (08:21–09:28)

• Mild Weakness Observed: EUR/USD touched 1.18 recently but remains range-bound.
• FX Recommendations:
  • Too early to sell USD aggressively against EUR, GBP, CHF.
  • NOK gained with oil, holding up well.
  • AUD – Tim’s top pick; RBA rate hike, outperformance potential vs USD.
  • Expectations of only modest USD correction, regardless of Middle East peace progress.
  • Quote (Tim, 08:28): “I still believe that it’s just too hard for investors to sell dollars against euros, pounds or even Swiss francs in any great size... the Aussie dollar... remains the currency I am most interested in owning.”

3. Yen Intervention and Outlook (09:28–10:39)

• Recent BoJ Intervention: Spent ~¥5 trillion (~$32bn) to strengthen yen, moving USD/JPY from 160 to 156, but largely back to early March levels.
• Skeptical on Lasting Impact: Real policy change (like rate hikes) needed; interventions alone likely insufficient. Long-term yen weakness remains unless BoJ acts.
  • Quote (Tim, 09:36): “Central bank intervention is overrated... until the Bank of Japan take real action to address the weak yen, it will stay weak and I’m not convinced they really want to act that way.”
• Recommendation: Prefer selling yen on any strength from interventions, rather than betting on a major turnaround.

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Memorable Moments & Notable Quotes

• “The notable exception was South Korea, where the KOSPI 200 was trading in positive territory. And Helen, it is now up around 90% year to date.”
  — Lucia Ciacilovic, 05:22

• “Silver reaffirmed its role as turbocharged gold, jumping almost $10 in a couple of days, not far off 15%... In gold I would stay long... but in silver... I might want to lighten up a bit on positions in case this move is not sustainable.”
  — Tim Gagie, 07:16

• “Central bank intervention is overrated... Honestly, I’d rather sell yen on such strengthening moves...”
  — Tim Gagie, 09:36

• “Why are good looking people always busy?... I’ll tell you later, Helen, I’m busy.”
  — Tim Gagie, 10:40
  (Lighthearted close to his segment)

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Timestamps for Key Segments

• 00:34 – Geopolitics & market risk-off tone
• 01:17 – European equity performance
• 01:58 – Central bank policy (Norway vs Sweden)
• 02:45 – US equity index moves
• 03:13 – Fixed income and bond market response
• 03:49 – Oil and gold price action
• 04:30 – US economic data and layoffs
• 05:22 – Asia Pacific markets (Japan, S. Korea)
• 06:15 – What to expect today (data preview)
• 07:06 – Tim Gagie: Metals update
• 08:21 – Tim Gagie: Dollar and FX analysis
• 09:28 – Tim Gagie: Japanese yen intervention critique

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Summary

This episode offers a compact but comprehensive review of global markets under the cloud of geopolitical unease, emphasizing the cyclical swings in equities, rates, energy, and currencies. Unpredictable headlines and central bank divergence rule the day, while investors await economic data for further direction. Tim Gagie’s segment provides actionable FX and metals insights, urging caution and selectivity amidst volatility.

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Transcript

[A]

Good morning everyone, and welcome to Julia Spare's Moving Markets Podcast. It's Friday 8th May, and my name is Helen Frear. My first guest this morning will be Lucia Ciacilovic and she'll be giving us a roundup of the latest news in financial markets. And then I'll be catching up with Tim Gagie on the latest moves in FX and metals markets. But first up with the market news, it is Lucia. Good morning, Lucia. Thank you for joining me.

[B]

Good morning, Helen.

[A]

So, starting with the big picture, yesterday, markets were again dominated by geopolitics and in particular by speculation over whether the US and Iran might be close to an agreement to end the war. How did this shape the market sentiment?

[B]

It really set the tone for the entire session. Investors were left guessing and that sense of uncertainty translated into a clear risk off mood. Early optimism faded quickly as there was no concrete confirmation of a deal. Instead, headlines kept markets on edge. And that hesitation showed up across equities, bonds and commodities.

[A]

European markets were the first to react. What stood out there?

[B]

So European stocks finished firmly in negative territory. The Stoxx 600 fell by more than 1%, giving back earlier gains. All of the major markets closed in the red, so stocks in the UK, France, Germany and Italy all struggled with the FTSE 100 leading losses. It was a broad based pullback, reflecting investor caution rather than company specific news.

[A]

Now, beyond the immediate conflict, central banks have been navigating a tricky landscape. We heard from the Norges bank and the Riksbank yesterday. So what were Their respective stances are quite different actually.

[B]

So the Norwegian central bank surprised markets by raising its policy rate by 25 basis points to 4.25%. They cited both rising energy prices and robust domestic demand as justification. They're clearly prioritizing tackling inflation, even if it means tightening policy faster than expected. Now, in contrast, Sweden's central bank held steady at 1.75%. Acknowledging that domestic inflation remains subdued, they are opting to wait and see the impact of the current global uncertainties, but signaled a willingness to act if conditions change.

[A]

And moving on to the us Equity markets there initially touched new highs before then reversing. So what happened?

[B]

So The S&P 500 briefly reached a new all time intraday high. But momentum faded as oil prices bounced back from earlier losses. The index ended the day down about 0.4%. Weakness in Amazon and in semiconductor stocks like Broadcom and Micron weighed on sentiment. The Nasdaq and the Dow Jones were both lower too.

[A]

Turning to fixed income, how did the Bond market respond to what was going on.

[B]

US treasury yields moved higher with the 10 year yield around 4.39% and the 30 year approaching 5%. Investors are closely watching how developments in the Middle east could feed into inflation expectations and in turn interest rate policy. Strong rhetoric from Iran around the Strait of Hormuz combined with reports of renewed overnight fighting, underlines that geopolitical risks remain very much in play.

[A]

Given everything then, how did oil prices perform yesterday? And where do we stand this morning? And what about gold as well?

[B]

So oil prices were quite volatile yesterday. They initially dipped on fleeting hopes of a deal, but later rebounded with WTI trading back above $95 a barrel and Brent above $101. And prices are holding around those levels this morning. Now, as for gold, prices have been rising over the past couple of days and are on track for a weekly gain. Investors appear to be holding on to hopes of an eventual peace deal even as renewed hostilities underline that uncertainty is high.

[A]

Taking a step back and looking at the macro backdrop, we saw a series of U.S. economic data releases yesterday.

[B]

What stood out there l the picture was mixed talent. Initial jobless claims rose slightly to 200,000, but that was still below expectations. Continuing claims edged lower. Productivity grew by 0.8% in the first quarter, missing forecasts, while unit labor costs increased by 2.3%, also below estimates. But separately, Challenger data showed that layoff announcements jumped 38% in April with artificial intelligence related cuts leading the way. Technology accounted for a large share of those reductions even as total planned layoffs remain well below last year's levels.

[A]

All right, and now shifting our focus to Asia. Overnight, Asia Pacific markets traded mostly lower with one notable exception.

[B]

Yeah, that's right. Japanese equities slipped overnight with some profit taking setting in after markets hit a record high on Thursday. Toyota weighed on sentiment after reporting that fourth quarter operating profit fel 49% pressured by US tariffs. And by the way, I saw a news item earlier that the US Trade Court ruled against Trump's 10% global tariffs. So let's see what will happen there. Now coming back to Asia, markets in China, Hong Kong and India all traded lower. The notable exception was South Korea where the COS P200 was trading in positive territory. And Helen, it is now up around 90% year to date.

[A]

Wow, that is very impressive. Just lastly then looking ahead, what can investors expect today?

[B]

We've already seen some early data from Germany, including exports which really surprised to the upside. Imports were much higher too, but industrial output came in lower than expected. Then later today, Helen, all eyes will be on the US non farm payrolls report for April, alongside average hourly earnings and the unemployment rate. Also, the preliminary May University of Michigan sentiment figure will be released. Now. Finally, as for US Stock futures, they were trading higher when I last checked. So let's see how we will wrap up the first week of May.

[A]

Wonderful. Thanks a lot Lucia for the great roundup this morning.

[B]

Thanks for having me, Helen.

[A]

And now over to you, Tim. Good morning. Firstly.

[C]

Good morning, Helen.

[A]

So the biggest impact of the positive news flow on the Middle east has been on metals. So let's start there. Is this a quick bounce or something more durable?

[C]

Yeah, there's been an inverse correlation between the oil price and the price of precious metals, which I think is quite striking. The interchanges between the two seem to be quite a good short term indicator of risk appetite and market optimism regarding the Middle East. Oil has been quite volatile and this has passed through most strongly to metals, causing some quite dramatic swings, especially in silver and to a slightly lesser degree, platinum. Silver reaffirmed its role as turbocharged gold, jumping almost $10 in a couple of days, not far off 15%. Gold was steadier, driving higher without the same volatility. And for now 4,500 has held as a really decent support level. We were never short any metal, but my approach to the precious metals is not quite uniform. I think in gold I would stay long unless you really just bought for a quick gain. But in silver, if you have long positions in profit or where losses were perhaps much larger when we were kind of drifting around 70 but of ease with this last move, I think I might want to lighten up a bit on positions in case this move is not sustainable. Positive news flow can easily reverse as we've seen. Plus we've got non farm payrolls coming this afternoon, which always has the potential to move things around.

[A]

There was some dollar weakness as well, but this seems to be milder. Is there more to come do you think?

[C]

Now there I'm less convinced. EURUSD has recovered from the March lows and has touched 1.18 a couple of times in the last few weeks, but it's not doing much and I still believe that it's just too hard for investors to sell dollars against euros, pounds or even Swiss francs in any great size. Some currencies have done well. The Norwegian Kroner benefited from rising oil and has managed to resist giving back most of these gains even when oil softens. My favorite currency, the Aussie dollar, is at its highest level since early 2022 against the dollar and I don't think it's yet time to sell it. There's plenty of room for further strengthening as it so drastically underperformed the other G10 currencies in 2025. The Reserve bank of Australia hiked rates this week, meaning Aussie yields are now firmly above those of the US dollar and it remains the currency I am most interested in owning. Nonetheless, I think even if peace is confirmed in the Middle east, if we make real progress, I still don't think this is going to trigger a massive selling of dollars, especially in something like Euro dollar where I really still foresee range bound behavior.

[A]

And let's finish with the yen. Some major intervention this week. Do you think this is going to change the trend?

[C]

I think central bank intervention is overrated. The Japanese spent something in the region of 5 trillion yen on the intervention and if, like me, you have no idea how much that is, it's about $32 billion. The result is dollar yen at 156. Actually almost 157 this morning from above 160. But 156 is where we were in early March and eurjpy is at 1.84 where we were trading about four weeks ago. So now what? Are they really going to continue to hammer through their foreign currency reserves in order to fight the market? Surely it would have been easier to hike rates and maybe they will. But until the bank of Japan take real action to address the weak yen, it will stay weak and I'm not convinced they really want to act that way. Anyway, inflation in Japan is 1.5%. But having suffered through so many years of zero to negative inflation, they are understandably terrified of going too early in this context. Honestly, I'd rather sell yen on such strengthening moves rather than sit on long yen positions and just continue to wait for the fabled big payoff. Finally, Helen, why are good looking people always busy?

[A]

I don't know.

[C]

I'll tell you later. Helen, I'm busy.

[B]

Very good.

[A]

Thank you very much Tim. Great to speak to you as always. So that is all for today. Thank you again to my guests this morning and thank you all for tuning in. Please subscribe to our show if you enjoy it and you can of course also leave us a review on whichever platform you like to listen on. So we'll be back again on Monday morning. Do join us then when I'll be back, joined as always by more of our colleagues to talk about what is moving markets. Until then, I wish you all a great day and then a great weekend. Bye for now. The information and opinions expressed in this podcast constitute marketing material and are not the result of independent financial or investment research. Please refer to www.juliusbear.com legal podcasts for further other important legal information.