Before the bell: Middle East keeps its finger on the trigger

Hopes for a 45-day ceasefire push Asian markets higher on Easter Monday.

During the shortened trading week, most indices ended the week in positive territory—something we had not seen for a while. The Bel20 gained 4.2% last week, while the Euro Stoxx 50 rose 2.3%. Carmakers Stellantis (+11.6%) and Ferrari (+4.9%) were among the strongest performers within the European index. Across the Atlantic, the S&P 500 and the technology-heavy Nasdaq advanced by 1.6% and 2.2% respectively. Investors dumped shares of Nike (-14%), as the US sportswear giant is seeing demand for its sneakers decline after years of growth. The UK-based mini-computer producer Raspberry Pi surged more than 50% over the week, as the company appears to be relatively unaffected by soaring memory chip prices. It once again illustrates that some stocks rise while others fall. Even over a long Easter weekend, diversification remains essential—do not put all your (Easter) eggs in one basket. There was briefly hope last week for an end to the conflict in Iran, but over the weekend US President Donald Trump issued an ultimatum demanding that Iran reopen the Strait of Hormuz by Monday. He initially overlooked Easter Monday and later extended the deadline to Tuesday. Meanwhile, a potential 45-day ceasefire may be under discussion. There is a good reason why prudent investors rarely become overly pessimistic.

Asian markets are trading higher this morning. In Japan, the Topix gained 0.7% and the Nikkei rose 1.4%. South Korea’s Kospi is also up 1.1%. Chinese markets remain closed today for the Qingming Festival, a day when people honour their ancestors. Most Western markets are also closed for Easter Monday. While US markets were closed on Good Friday along with other Western exchanges, they are open today. Corporate news flow, however, remains relatively limited.

High-tech real estate

Investors looking to diversify within real estate should not limit themselves to traditional property but also consider modern forms of real estate. US tower operator SBA Communications was one of the standout performers in the S&P 500 last Thursday. The stock surged nearly 19% on the final trading day of the week. The main driver? Takeover speculation. SBA is often seen as the smaller counterpart to American Tower Corp. Large infrastructure funds are looking to diversify and capture a share of the growing tower market. This market is driven by mobile data usage and the increasing demand for digital connectivity everywhere. For those interested in the sector, the infrastructure behind these networks is becoming ever more critical.

Another notable winner

Despite high energy prices and declining equity markets driven by the conflict in Iran, some stocks have performed strongly this year. Lumentum Holdings, for example, has more than doubled since the start of the year. The company develops optical technologies (in essence, fibre-optic applications) and forms a key backbone for data centres and artificial intelligence. Companies like Lumentum provide the “highways” on which data travels. The rise of AI requires ever more data to be transmitted at high speed, making fibre-optic solutions indispensable. In addition, the company is active in 3D sensing and develops lasers used for facial recognition and depth sensing in smartphones and other devices.

Did you know…

that Turkish economist and energy expert Fatih Birol is urging countries not to stockpile oil and gas during the Iran conflict? If everyone starts hoarding energy, it will only push prices even higher.

This article was translated from Dutch and was originally published on Spaarvarkens.be.