Danske Bank analysts observe that global equities are about 4% above recent lows, with investors increasingly pricing a future de-escalation in the Middle East. Cyclical sectors have outperformed and volatility has declined across regions and asset classes. They note that markets are trying to look through near-term geopolitical noise while tracking US and Asian moves.

Cyclicals lead as volatility eases

"Equity markets traded broadly sideways over the Easter period in the regions that remained open, following the rebound seen into the holiday."

"Markets in the US edged higher yesterday, while Asian trading this morning is mixed."

"Importantly, this does not change the bigger picture: global equities are still ~4% above the recent lows, reflecting a market that is increasingly pricing when - not if - we get a de-escalation in the Middle East."

"Cyclicals have, not surprisingly, outperformed from the lows."

"More notably, however, volatility has declined across regions and asset classes, reinforcing the notion that investors are trying to look through the near-term noise."

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