European markets returned on Tuesday after the Easter break, with investors facing a mix of geopolitical risks and economic releases that could shape sentiment for the week. All eyes are on Iran’s response to the deadline set by US President Donald Trump to reopen the Strait of Hormuz, a strategic route for global oil shipments. Any change in the status of the strait could have an immediate impact on energy markets and inflation expectations.
Oil prices remain sensitive to the ongoing tensions. Analysts at J.P. Morgan have warned that prices could surge to $150 a barrel if supply disruptions continue through mid-May. European energy firms and investors are monitoring the situation closely, as the closure of the strait could intensify global supply constraints.
Economic data also takes centre stage this week. On Tuesday, the eurozone’s purchasing managers’ index (PMI) is due, offering insight into business activity across the bloc. Recent readings have suggested modest expansion, with slowing demand and uncertainty affecting growth prospects.
Wednesday will see the release of eurozone retail sales and industrial producer price figures from Eurostat, providing an indication of consumer spending and inflation pressures upstream. Euro area financial accounts will offer further details on lending trends, while UK markets remain focused on labour and growth signals following recent stagnation concerns.
In the United States, the Federal Reserve’s meeting minutes, also released Wednesday, will be scrutinised for clues about the timing of potential interest rate adjustments. Thursday brings weekly US jobless claims, shedding light on employment conditions, ahead of the release of the US consumer price index for March, including the core CPI reading, on Friday. Strong inflation data could reduce expectations of policy easing, adding volatility to global markets.
Corporate activity in Europe is limited this week, though investors will monitor Raiffeisen Bank International’s annual general meeting on Thursday for any insights into regional banking conditions and credit trends.
Investors are navigating a week where geopolitical developments and economic signals are likely to dominate market movements. Analysts note that with the Iran conflict and the risk of supply shocks, coupled with central bank policy uncertainty, European markets may see heightened volatility in the coming days.
The combination of geopolitical tension, energy market sensitivity, and key economic releases underscores the cautious approach many investors are taking as trading resumes after the holiday break. European markets will be closely watching both policy signals and any developments regarding the Strait of Hormuz for direction in the short term.
