Equity markets ended last week higher, led by technology and growth shares, despite Iran-related tensions and higher oil prices weighing on sentiment. Markets also saw equities and bond yields rise at the same time.<\/p>\n
A negative correlation between equities and bonds was reported to be returning, after a period when they had tended to move together. The week finished with higher share prices alongside higher yields.<\/p>\n
Earnings season was described as very strong and as a key driver of the recent gains. Geopolitical risks linked to Iran and the wider Middle East were described as a source of potential downside.<\/p>\n
Equity markets were reported to be up around 6\u20137% year-to-date, with returns said to be driven mainly by positive earnings growth rather than valuation changes. The piece notes it was produced using an AI tool and reviewed by an editor.<\/p>\n
With strong first-quarter earnings providing a solid foundation, we should consider bullish strategies on equities. Recent reports show that over 80% of S&P 500 companies have surpassed their Q1 2026 earnings per share estimates, lending credibility to this rally. This suggests buying call options on tech-heavy indices could be a sound move for the coming weeks.<\/p>\n
The persistent tensions in the Middle East mean we must remain cautious about potential shocks. WTI crude oil has pushed past $95 a barrel, its highest level since the flare-up we saw back in late 2025. Buying out-of-the-money call options on energy ETFs could serve as an effective hedge against a sudden escalation.<\/p>\n
We’re seeing a return to the classic negative correlation between stocks and bonds, a strong risk-on signal. As the 10-year Treasury yield hovers near 4.8%, this trend suggests traders could consider pairing a long equity position with a short bond position. This might involve buying put options on a long-duration bond fund like TLT.<\/p>\n
The strong earnings momentum is acting as a support level for the market, which may dampen overall volatility. With the VIX settling back below 15, selling cash-secured puts or put credit spreads on robust companies that have already reported strong results could be a viable strategy. This approach allows us to collect premium while betting that the earnings backdrop will prevent a sharp downturn.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Equities rose on strong earnings despite Middle East tensions, while bond yields climbed, reviving equities-bonds negative correlation.<\/p>\n","protected":false},"author":38,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[46],"tags":[],"class_list":["post-46501","post","type-post","status-publish","format-standard","hentry","category-live-updates"],"acf":[],"aioseo_notices":[],"featured_image_src":null,"featured_image_src_square":null,"author_info":{"display_name":"josephine","author_link":"https:\/\/www.vtmarketsglobal.com\/en\/author\/josephine\/"},"_links":{"self":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts\/46501","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/users\/38"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/comments?post=46501"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts\/46501\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/media?parent=46501"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/categories?post=46501"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/tags?post=46501"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}