Tensions rise, markets shift after Trump dashes hopes of a quick resolution

Summary

---

Moving Markets — “Tensions Rise, Markets Shift after Trump Dashes Hopes of a Quick Resolution”

Host: Helen Frear
Guests: Roman Canciani (Markets Update), Carsten Menker (Aluminium Market)
Date: April 2, 2026

---

Episode Overview

This episode unpacks a turbulent week in global markets amidst escalating geopolitical tensions in the Middle East, particularly following President Trump’s hawkish speech that quashed earlier optimism for quick de-escalation. The Julius Baer team analyzes resulting market swings, sector performances, standout corporate news, macroeconomic data from the US and Switzerland, and a special focus on aluminium market disruptions following attacks in the Gulf region.

---

Key Discussion Points & Insights

1. Market Rollercoaster: From Relief Rally to Sharp Downturn

[00:31–02:49]

• Early Optimism:

  • President Trump’s initial comments on a potential US withdrawal from Iran sparked a relief rally.
  • Significant gains across equity markets:
    • Europe: Stoxx 600 up 2.5% in three days — strongest run in nearly a year.
    • Sectors:
      • Defense: +6%
      • Banking: +4.5%
      • Airlines: Boosted by falling oil prices (Air France, Lufthansa notable gainers).
    • US markets: All major indices “closing comfortably in the green,” led by technology stocks.

• Turning Point:

  • Trump’s overnight address reversed sentiment — he “dismissed the possibility of a swift resolution,” vowing the US “would hit Iran very hard in the coming weeks.”
  • Immediate risk-off reaction across Asia-Pacific:
    • Kospi: –5%
    • Nikkei 225: –2.5%
    • Oil prices: Up 8% to $108/bbl, driven by shipping disruption in the Strait of Hormuz.
    • US Dollar: Rally as investors seek safety.
    • Precious metals: Gold and silver prices reversed recent gains.
    • US Treasury yields: Rising to 4.38% on 10-year notes.
    • Outlook: US equity futures signal broad declines ahead of US opening.

• Notable Quote:

  • “He essentially dismissed the possibility of a swift resolution stating the US would hit Iran very hard in the coming weeks. That immediately triggered a risk off environment across Asia Pacific markets.” — Roman Canciani [01:44]

---

2. Greece Returns to Developed Markets Status

[02:56–03:40]

• MSCI Upgrade:
  • Greece set to rejoin MSCI’s Developed Markets Index (May 2027).
  • Significance: “Growing confidence in Greece’s financial stability and market accessibility after years of struggle.”
  • Greek stock market up ~320% since 2020 pandemic lows.
  • “This upgrade is expected to attract significant foreign investment...though overall mood remains cautious due to geopolitical risks.”

---

3. Corporate Spotlight: LVMH’s Tough Start

[03:40–04:30]

• Luxury Sector Vulnerability:
  • LVMH’s share price fell 28% in Q1 2026 — its worst ever start.
  • High-end demand suffering from geopolitical uncertainty and global economic softness, especially impacting aspirational buyers.
  • Hennessy Cognac (Wines & Spirits) division faces headwinds.
  • “It underlines how sensitive even the most resilient businesses can be to global instability.” — Roman Canciani [04:22]

---

4. Macro Data Highlights

United States

[04:30–05:12]

• US Economy Shows Resilience:
  • February retail sales up 0.6% MoM (boosted by car sales).
  • ADP private payrolls rose by 62,000 in March, beating forecasts.
  • Robust consumer demand supported by wage growth and higher tax refunds.
  • Data points reflect pre-escalation environment.

Switzerland

[05:12–05:48]

• Swiss Outlook:
  • PMIs improved, but sentiment pressured by rising energy costs and regional conflict.
  • Inflation forecast to rise to 0.5% YoY in March (from 0.1% in February).
  • Long-term impact likely capped by Switzerland’s energy mix, regulated tariffs, and currency strength.

---

5. Market Caution & Near-term Risks

[05:48–06:20]

• Most Western markets to close for Good Friday.
• Given heightened risks, many investors likely to reduce exposure heading into the long weekend.
• Key US and Swiss economic data due today: US trade balance, initial jobless claims, Swiss CPI.
• “The situation remains incredibly fluid. So hold on tight.” — Roman Canciani [06:15]

---

6. Special Focus: Aluminium Market Disruption

Host: Helen Frear, Expert: Carsten Menker

[06:29–09:38]

• Smelter Attacks in Gulf Region:

  • Initial news understated damage; official disclosure came with delays.
  • Abu Dhabi smelter halted due to power plant hit — molten metal solidified, described as a “worst-case scenario,” requiring 6–12 months for repairs.
  • Second smelter (1.625M t/year) also affected; scale of damage not formally updated, but “a significant share of the still operating capacity was damaged by the drone attack.”

• Production Outlook:

  • Only 40–45% of the region’s aluminium production can now be rerouted, down from previous estimates of 70–80%.
  • “All in all this implies a loss of around 3.5 million tons of annualized capacity for the next few months.” — Carsten Menker [08:33]
  • Some loss to be offset elsewhere, but also implies necessary “demand destruction”.

• Price Impact:

  • 3-month aluminium price target hiked to $3,600/ton (was lower); 12-month target unchanged at $3,000/ton, expecting eventual normalization.
  • Physical premiums to stay elevated, especially for Europe, with knock-on effects to US & Asia.
  • “It does. So we lifted our three month price target to $3,600 per tonne, but remained neutral given the uncertainty and the high volatility.” — Carsten Menker [08:56]

---

Notable Quotes

• “He essentially dismissed the possibility of a swift resolution stating the US would hit Iran very hard in the coming weeks. That immediately triggered a risk off environment across Asia Pacific markets.” — Roman Canciani [01:44]
• “It underlines how sensitive even the most resilient businesses can be to global instability.” — Roman Canciani [04:22]
• “All in all this implies a loss of around 3.5 million tons of annualized capacity for the next few months.” — Carsten Menker [08:33]
• “We lifted our three month price target to $3,600 per tonne, but remained neutral given the uncertainty and the high volatility.” — Carsten Menker [08:56]

---

Timestamps for Key Segments

• Markets recap & relief rally: [00:31–01:29]
• Trump’s speech & global market reaction: [01:29–02:49]
• Greece’s MSCI upgrade: [02:56–03:40]
• LVMH & luxury sector woes: [03:40–04:30]
• US macroeconomic data: [04:30–05:12]
• Swiss macroeconomic data: [05:12–05:48]
• Risk management/pre-weekend outlook: [05:48–06:20]
• Aluminium market disruptions & analysis: [06:33–09:38]

---

Conclusion & Looking Ahead

• Markets remain volatile due to rapidly shifting geopolitical tensions, with investor sentiment turning sharply risk-averse.
• Specific sectors and regions — luxury goods, energy, aluminium — display particular vulnerabilities.
• The aluminium market faces a worst-case scenario in the Gulf, driving significant price revisions and supply chain concerns.
• Investors are advised to remain cautious, particularly with upcoming holidays limiting trading opportunities and as key economic data is released.

---

End of Summary

Transcript

[A]

Good morning everyone and welcome to Julius Baer's Moving Markets podcast. It's Thursday 2nd April and my name is Helen Frear filling us in on the latest in financial markets today. I'll be speaking first of all to Roman Canciani and then with an update on aluminium. I'll also be catching up with Carsten Menker. So that's in just a few minutes. But over to you first of all, Roman, for the market news. Good morning.

[B]

Good morning, Helen.

[A]

So it's been quite a rollercoaster in markets this week so far. Initially up on hopes of a de escalation in the Middle east, only to see those hopes dashed. Can you walk us through what's been happening please, Roman?

[B]

Absolutely. Well, early in the week, President Trump's comments suggesting a potential withdrawal from Iran sparked a relief rally. European stocks really benefited with the Stoxx 600 seeing its strongest three day run in almost a year, climbing 2.5% only yesterday. Sectors like defense and banking saw particularly strong gains, jumping almost 6% and 4.5% respectively. Even airlines got a boost as oil prices eased with Air France and Lufthansa experiencing substantial rises yesterday. And there was a similar story in the US with all major indices closing comfortably in the green there under the lead of the tech sector. However, that positivity proved fleeting.

[A]

Yeah, it was fleeting. In his address to the nation overnight, President Trump delivered a speech that significantly altered the narrative. What was the immediate reaction?

[B]

The speech was a real turning point for the markets again. He essentially dismissed the possibility of a swift resolution stating the US Would hit Iran very hard in the coming weeks. That immediately triggered a risk off environment across Asia Pacific markets early. Earlier gains evaporated. South Korea's Kospi is down over 5% this morning and Japan's Nikkei 225 followed suit, dropping almost 2.5%. Oil prices spiked, surging around 8% to trade around US$108 a barrel as we speak. Driven of course by continued disruption to shipping through the Strait of Hormuz. Investors rushed towards seemingly the only safe haven left, sharply strengthening the US Dollar. And precious metals like gold and silver are trading lower again, reversing their gains from earlier this week. This morning, US treasury yields are up too, with the 10 year trading around 438 after scratching the 430 level yesterday. And equity futures also currently point to a sea of red at the start of US Trading this afternoon.

[A]

Let's try and find some more positive news then. Looking at Europe quickly, there's news on Greece, right?

[B]

Yes. There's an interesting story unfolding in Greece. MCI announced yesterday that Greece will rejoin its Developed Markets Index in May 2027, and this is pretty huge. It signifies growing confidence in Greece's financial stability and market accessibility after years of struggle. Since the pandemic low in 2020, the Greek stock market has soared by around 320%, massively outperforming many developed peers. This year. This upgrade is expected to attract significant foreign investment. However, of course, investors are reluctant to trade on this for now as the overall mood remains cautious considering the ongoing geopolitical risks.

[A]

Let's move on to some corporate news now. And lvmh, the luxury giant recently released quite a concerning update. Could you elaborate on this for us?

[B]

LVMH experienced its worst ever start of the year with its share price falling 28% in the first quarter. Political tensions and a shaky global economy are hitting demand for luxury goods hard. The war is disrupting travel and tourism and creating general economic uncertainty. And the LVMH is particularly vulnerable because it caters to aspirational buyers who cut back on discretionary spending during turbulent times. Their Wines and Spirits division, specifically Hennessey Cognac, is also facing headwinds. It underlines how sensitive even the most resilient businesses can be to global instability.

[A]

Turning to the macroeconomic picture, we've seen some interesting data releases from the us. How are things looking across the pond?

[B]

The US economy continues to show surprising resilience. February retail sales beat expectations, rising 0.6% month on month, boosted by stronger car sales. Furthermore, the ADP private payrolls report indicated a healthy increase of 62 jobs in March, exceeding forecasts. These figures suggest that consumer demand remained robust before the full impact of the escalating conflict in the Middle east became apparent. Wage growth, outpacing inflation and larger tax refunds are contributing factors.

[A]

And there was also news from Switzerland, right?

[B]

Swiss economic indicators published for March yesterday present a mixed bag. While PMIs improved, rising energy costs and supply chain issues related to the conflict are putting downward pressure on sentiment, inflation. The March figures will be published later this morning is expected to tick up slightly, reaching 0.5% year on year, far above the 0.1% increase in February. But the longer term impact should be limited by Switzerland's energy mix, regulated tariffs and the strength of the Swiss franchise.

[A]

All right now just finally looking ahead, Roman, what should investors look out for over the next few days?

[B]

Tomorrow, most Western markets will be closed for Good Friday. Given the increased uncertainty, investors might choose to reduce risk Exposure today to avoid being caught off guard by any unexpected escalations over the weekend. Key data releases today include the US trade balance, initial jobless claims and Swiss cpi. Ultimately, the situation remains incredibly fluid. So hold on tight. That's it from me.

[A]

Very good. Thank you very much, Roman, for the roundup this morning.

[B]

Thank you very much Helen. Always a pleasure.

[A]

And now on to you. Carsten, good morning.

[C]

Good morning, Helen.

[A]

We often say that no news is good news, but in the case of the aluminium market, this doesn't apply. A few days after the attack on two smelters in the Gulf region, it now looks like the damage is much more expensive than initially expected.

[C]

That's right and it's quite a negative surprise. My assumption was that any severe damages would have been reported by the smelters right away. Instead, it took one of the affected companies four days to announce that it had to halt its Abu Dhabi based smelter. According to the available information, it is not the 1.5 million tons per smelter itself that was damaged, but rather the power plant. And as a result the hot metal in the smelter has solidified. This is really a worst case scenario as it requires extensive repair ranging from say 6 to 12 months.

[A]

Okay, that is quite a long time. What about the other smelter which was also attacked at the weekend?

[C]

Well, unfortunately there is no official update from them yet. So the only thing they said on Monday, I believe, or on the weekend that they are assessing the damage. This company had previously closed down some of its capacity before. It's a 1.6 to 5 million ton a year smelter when the war started. And according to unofficial information, a significant share of the steel operating capacity was damaged by the drone attack. So while this has not been confirmed yet by the company, but both news items taken together suggest a significant supply disruption for the aluminium market.

[A]

And what does this mean now for the market then?

[C]

Factoring in the damage and also logistical challenges, we now estimate that only around 40 to 45% of the region's production will be rerouted. Remember we talked about 70 to 80% before. So all in all this implies a loss of around 3.5 million tons of annualized capacity for the next few months. At least part of this loss will be offset by increasing production elsewhere. But it will also require demand destruction.

[A]

And that sounds like higher prices.

[C]

It does. So we lifted our three month price target to $3,600 per tonne, but remained neutral given the uncertainty and the high volatility. But at the same time we leave our 12 months target unchanged at $3,000 per ton, expecting a normalization of market conditions and then physical premiums which industrial users pay on top of the exchange. Quoted prices are also set to stay elevated as long as the disruption persists and due to the regional proximity. Of course, this applies first and foremost to Europe, but to a lesser extent also the US and Asia.

[A]

Excellent. Thanks a lot Karsten. Really good to hear from you as always.

[C]

Thank you Helen.

[A]

So that's it for today. Thank you again to Roman and Carsten and to you, our listeners, for tuning in. I hope you enjoyed the show. If you did, then make sure you subscribe if you haven't already, and please join us again next week. So just to note, due to the Easter weekend, there will be no podcast tomorrow or on Monday, but we'll be back as usual again on Tuesday morning. So I hope you'll join us then. Our weekly View beyond podcast will be available as usual though over the weekend. Have a great day everyone and then a great long 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.