Daily market report Tuesday 7 April

Power and gas prices settle higher as geopolitical optimism fades

Gas and power

Power and gas prices settled higher on Thursday in a shortened trading week ahead of the Easter break. Prices recouped losses from earlier in the week after market participants reacted to President Trump’s highly anticipated national address. Rather than reinforcing expectations of de escalation, the address dampened sentiment, with comments that contradicted earlier statements and shifted market expectations in the opposite direction. The President stated that he would “hit the Iranians extremely hard” and warned that strikes on Iran’s power infrastructure would follow if no agreement is reached. 

Adjacent markets

US equity markets fell early Thursday as risk sentiment weakened, with stocks and bonds selling off, oil prices surging, and the dollar strengthening after President Trump offered limited clarity on prospects for de-escalation in the Iran conflict. Sentiment later improved in the US session, with equities rebounding around midday after a Bloomberg report that Iran is coordinating with Oman on a protocol to manage shipping through the Strait of Hormuz, easing fears over disruptions to a key energy route. Separately, the head of the International Energy Agency warned that supply disruptions could begin impacting Europe’s economy in April, after the region had previously been insulated by pre-war contracted cargoes.