Meanwhile, the week’s most closely monitored earnings went extremely well. Chip stocks rallied on better-than-expected results from Samsung and AMD, while the Nasdaq renewed record after record. The good mood got a further sugar coating from falling sovereign yields, as declining oil prices also pulled inflation expectations lower and softened central banks’ policy outlooks.

All of a sudden, the potential ‘Iran deal’ headlines are replaced by news that the US had ‘struck military targets in Iran after the country fired on three Navy destroyers sailing in the Strait of Hormuz’, suggesting that we’re back to square one. US crude rebounded past the $98pb level and is consolidating just below the $97pb mark, while Brent is settling above $101pb at the time of writing.

We have no idea how the situation will evolve, but the track record of the past two months is not really encouraging, and the Friday close is always a critical moment as the US tends to make decisive moves during no-market hours to give investors time to digest the information, hoping to push volatility into Monday and eventually drown out bad news with encouraging — often unfounded — announcements.

It has admittedly worked well so far… Since the start of the war, the S&P 500 has hit fresh record highs nine times, if my count is right. US futures are in positive territory this morning, European appetite is somewhat less.

On the earnings front, Whirlpool warned that record-low sentiment — due to the Iranian war and the doubling of gasoline prices — has plunged demand for appliances to a level the company says could lead to a ‘recession-level industry decline’. The stock plunged 12%, while the tech-heavy S&P 500 was busy flirting with fresh ATHs. Oh well...

Anyway, we have one more thing to watch before this week’s closing bell, and that’s the US jobs report. The US economy has been in a phase of low hiring and low firing, with the latest jobs data suggesting that the slowdown is not as bad as feared. Earlier this week, the ADP report printed lower-than-expected job additions of 109K, but the number did not sound alarming — and the data certainly got diluted amid more exciting war and tech earnings headlines.

Headlines remain dominated by geopolitical tensions, but today’s official jobs data still deserves attention. The median forecast in the latest Bloomberg survey points to 65K new nonfarm job additions in the US last month, with average wage growth rebounding from 3.5% to 3.8% y-o-y.

As I repeated several times earlier this week, estimates diverge remarkably. Some expect the US jobs market to have added a significantly lower number of jobs compared to the median forecast, pointing to thousands of job cuts from Big Tech names due to AI replacement and the ongoing immigration struggle, while others predict that massive AI spending is creating jobs and should at least limit the AI-related slowdown. We will see where the data lands today.

As for the market reaction, I would expect a stronger-than-expected set of figures to keep Federal Reserve (Fed) hawks in charge, without necessarily taming equity appetite — the latter will likely depend on war headlines.

A softer-than-expected set of jobs figures, on the other hand, could revive dovish Fed expectations and provide further support to equity valuations, provided that war headlines leave some room for reaction and wage growth remains reasonable. By reasonable, I mean a figure in line with — or ideally softer than — the 3.8% yearly expectation, while uncertainty about oil prices remains very, very high.

And this last part is important, because some Fed members are growing more concerned about the inflation outlook than the health of the jobs market — a notable shift compared to the pre-war narrative, mind you. That change — from worrying about a softening labour market to worrying about overheating price pressures — puts inflation/wages figures front and centre, while making the headline NFP somewhat secondary when it comes to guessing the Fed’s next move. The best outcome for the market would be relatively strong job additions paired with relatively softer wage growth.

Speaking of good data, here’s something that made me smile. Bank of England (BoE) officials are apparently worried that the UK’s economic data looks too good to be true — and, more importantly, that it may be sending a misleading signal to markets, making the job of setting monetary policy even trickier than it already is amid Middle East jitters. In fact, first-quarter growth has consistently come in strong since 2022, only to fade later in the year.

It probably has to do with consumer behaviour and post-Covid spending habits — or so it is said — and the fact that the ONS has not found a way to smooth out the numbers enough for seasonally adjusted figures to be fully consistent. If that pattern repeats again, the BoE could end up tightening policy more than necessary in its fight against inflation, and into a more rapidly deteriorating UK economic outlook than early-year data suggests.