Danske Research Team reports a strong risk-on session in equities, driven by optimism around a possible US–Iran deal and lower Oil prices. Cyclical growth and momentum outperformed, while defensives and energy lagged. The team stresses that Iran developments and Hormuz reopening prospects are currently the dominant driver for cross-asset positioning.

Cyclicals lead as energy lags

"Equities moved higher yesterday, driven by renewed hopes around US-Iran negotiations and, by extension, a potential reopening of the Strait of Hormuz. With oil prices falling and optimism improving, the equity market delivered a more or less full risk-on session."

"Cyclical growth and momentum led the market higher, while defensives, minimum volatility and value underperformed, with energy at the bottom of the sector ranking."

"The equity rotation was interesting in itself, but the most important signal came from the bond market, where the long end of the curve moved lower. The conclusion is that a potential resolution around Iran and a reopening of Hormuz is currently dominating the rising concern around debt imbalances and fiscal deficits."

"Asian equities are continuing the positive trend this morning, led by South Korea, which is up 8% at the time of writing. That is absolutely crucial for our cross-asset call right now, and it goes without saying that we were very pleased to see yesterday's market reaction and rotation."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)