In a surprise turn of events, the US indices snapped a 5-week losing streak and advanced by around 3% last week, as both the US and Iran signaled a willingness to end their conflict. The SPX, along with gains in AI Tech (MSXXAIB +6.5%), Financials (MSXXFINL+3.9%), and Cyclical stocks (Early Cycle Cyclicals MSXXECYC +2.6%), helped drive the rally. Despite institutional investor engagement remaining relatively muted due to the absence of an “all clear,” there were areas of limited offense, such as Agentic AI (MSXXCLAW+8%) and Global Memory (MSXXGMEM +4%). The average US L/S also gained 2.2% through Wednesday’s close, bringing YTD PnL to -2.7%.

The positive developments in the US-Iran conflict were the driving force behind the rally last week. Reports emerged that President Trump informed his aides that he is willing to end the US military campaign even if the Strait of Hormuz remains largely closed, following Iran’s President stating that the country has the “necessary will to end this war.” De-escalation was supportive of risk appetite, but volatility remained high after President Trump’s Wednesday night address raised concerns of escalation. However, news of Iran discussing a protocol with Oman for traffic in the Strait of Hormuz helped ease fears and led to an intraday reversal, with equities ending flat.

For the week, the NDX (+4%) emerged as the top performer among US indices, followed by gains of 3.4% for IWM. European indices also advanced, with the UKX (+4.7%), DAX (+3.9%), and KOSPI2 (+3.8%) all posting gains. However, Asia lagged behind, with the TPX (-1%), HSTECH (-2%), and KOSPI2 (-3.8%) underperforming. Yields fell by 12 basis points, alongside a decline in Brent WTD, with front-month futures falling -3.5% and longer-dated contracts down over 6%.

Momentum remained in focus, with MSZZMOMO (+2.4% w/w) starting off 2Q on a solid footing, in line with recent seasonals. Momentum has gained in each of the past 3 Aprils, with MSZZMOMO posting an average gain of +6.8%.