Key Summary

Rising oil prices and Treasury yields are still two key factors that should continue to drive markets in the week ahead. And both are very much driven themselves by US-Iran developments at the moment. Tensions remain high as US president Trump claims that Iran will pay "many times over" for the killing of American soldiers. That as both sides continue to exchange military strikes in the meantime too. However, there was a bit of hope perhaps late yesterday with Axios stating that Trump is mulling over a renewed ceasefire deal with Iran or engaging in a full scale war next. After some pushing and pulling yesterday, oil prices are settling well above $80 with WTI crude seen around $82.30 currently. Meanwhile, 10-year Treasury yields are resting at 4.59% as we look towards the session ahead. The push up in oil prices and yields overnight, more so the latter, helped to underpin the dollar while also weighing on equities. So, that is keeping broader markets in a more pensive mood despite the light bounce in US futures to start the day. Tech shares are leading the rebound but remember, this comes after the heavy selling on Friday and also as the early gains yesterday were wiped out by the closing bell. As such, it is still early in the day to be drawing any conclusions from the moves in Asia trading - especially for US stocks, which will rely heavily on the mood only when Wall Street enters the fray. For now, European traders are set to be greeted with a more pensive and tentative mood. Headline risks will be key once again with eyes on US-Iran developments. I fear that even with renewed hopes of another ceasefire deal, it will just be a case of déjà vu more than anything else. Iran will be more than happy to keep playing for time and kicking the can down the road. So, any continuation of a ceasefire or the previous memorandum of understanding should not be expected to last. And therein lies the danger for markets in buying into the hope and optimism of any rumoured headline or speculation. It's been 145 days already since the conflict began. And the situation now is no better than what it was on 1 March. That tells you all you need to know. This article was written by Justin Low at investinglive.com.