Indices: Escalating Middle East conflict pressures risk assets, Asian indices takes a hit
– U.S. equity index futures fall back after a volatile session dominated by geopolitical headlines tied to the U.S.–Iran conflict and surging crude prices with losses reduced by the close from worrying intraday lows after President Trump said they’d escort tankers through the Strait of Hormuz if necessary; (-0.9% to 6,816), (-1.1% to 24,720), Dow 30 (-0.8% to 48,501), and Russel 2000 (-1.8% to 2,608); Treasury yields moved higher across the curve but fell back notably from intraday highs, and market pricing (CME’s FedWatch) nearly fully pricing in a hold on rates this month out of the Fed with the second rate cut of this year pushed out to December
– Asia this morning sees Japan’s (-4%) go for a nasty drop, and with far heavier losses in South Korea, activating circuit breakers for and
Stocks:
– Shares of (-1.3%) fall back in what was a bad session for semiconductors with far larger losses for (-3.9%), (-5.3%) and especially (-8%), with notable losses for semiconductor equipment, computer hardware and electronics as well
– Big Tech relatively stable by the close with gains for (+1.4%) and limited losses for most save (-2.7%); BNP Paribas Exane keeps its underperform rating on the EV maker but lowers its price target
– Tough session for shares of falling 3.8% as FT says its flagship private hit with a wave of redemptions
– Meme stock movers: (-3.7%), (-2.3%)
– Crypto stocks track cryptocurrencies lower: (-1.6%), Micro
– Earnings:
o : beats on earnings and revenue; shares dipped 0.2% in after-hours trading
o : beats on earnings with a slight miss on revenue; shares close 6.7% higher
o : beats on earnings while falls slightly short on revenue; shares jump 7.1% by the close
o : sees first-quarter adjusted EPS below expectations; shares plunge 22.2%
Commodities: Ongoing volatile technical overviews
– Harsh pullback for briefly falling below $5K before partially recovering to $5.1K as early potential signs of liquidity stress gave the dollar a boost and so too rising yields a negative factor for the non-yield metal, with a far more aggressive drop for below $78 at one point before getting back into the $84 handle and taking the gold/silver ratio higher for a second straight session
– prices (WTI) climb and move further away from the weekend gap in what is still a very volatile environment with intraday highs breaching $77 before coming back to $75; traders assess a U.S. proposal to insure and potentially provide naval escorts for tankers transiting the Strait of Hormuz amid stalled traffic and mounting Middle East hostilities, with Iraq halting operations at some major fields (Rumaila, West Qurna 2 and Maysan according to reports); API’s weekly energy inventory readings show a build for oil (+5.6m barrels), a modest one for distillate (+0.5m), while a draw for gasoline (-3.3m); QatarEnergy production halt to extend to some downstream products; Saudi Aramco reportedly reviewing alternative routes for its exports including informing crude buyers that cargoes are to be loaded on the Red Sea coast to avoid the Strait of Hormuz; natural gas climbs again but the moves are far more volatile for key European benchmarks surging again
FX/Central Banks/Crypto:
– Bitcoin relatively stable despite the sizable risk-off moves yesterday and dollar strength, hovering below $68K with Ether back beneath $2K
– climbs again briefly breaching 99 supported by haven demand turning into the flight to liquidity at times; reached lows unseen since November before getting back to 1.16 while breached a mid-term resistance level
– ’s Williams that if inflation ebbs then further reductions in the policy rate will eventually be warranted and that the U.S. economy is less dependent on imported oil and proved resilient to energy price shocks, Schmid that inflation is hot with demand outpacing supply, and Kashkari that it is too soon to know how Iran war will affect inflation but where conditions could justify an extended pause
– European Central Bank’s Lane that a prolonged war and a persistent decline in oil and gas supplies could cause a “substantial spike” in inflation and a sharp drop in EZ output, Villeroy on the limited economic exposure to France from the tension and that it would be a mistake to predict a rate move in a hurry, Kazaks that there’s no need to rush the rate decision with February’s inflation reading to keep them in a cautious mood, and Stournaras also in no rush to change rates and that conflict continuity will push upward pressure on EZ inflation
Capital.com Client Sentiment:
– Indices: Controlled increase in long bias in the S&P (72% from 69% yesterday)), Russell (67% from 64%) and less so in the Nasdaq (66% from 58%) while it dropped in the Dow (6% from 67%) as longs got squeezed; elsewhere also a story of limited increases in buy sentiment following the harsh pullback in the DAX (74% from 73%), FTSE (67% from 64%), Nikkei (76% from 73%) while a bigger jump in long bias occurred in the ASX (from 76% to an extreme buy 82%)
– Commodities: Holds in gold (at an extreme buy 84%) following the plummet while trim it a notch in silver (to 87%) as fresh longs got hit on the pullback; in energy remain extreme buy in WTI (83% from 86% yesterday) and so too in natural gas (88% from 89%)
– FX: Majority buy and rising in EUR/USD (59% from 58% yesterday) while trimming it in GBP/USD (55% from 61%) and AUD/USD (from 57% to the middle), also shifts in USD/JPY again (from a slight sell 51% to a slight buy 52%)
Data:
– U.S. RCM/TIPP economic optimism for March worsens to 47.5 and below forecast opting to remain in pessimistic territory
– EZ preliminary pricing for February shows headline y/y climb to 1.9% from 1.7% and so too reaching 2.4% with sizable m/m growth of 0.7% and 0.8%, respectively
– Chinese PMIs released this morning for the month of February shows both manufacturing and services still in contraction (49 and 49.5, respectively) according to NBS while expansionary and improve according to RatingDog’s readings (52.1 and 56.7, respectively)
– Australian GDP Q4 GDP up 0.8% q/q beating forecasts; services PMI for February improves to 52.8
Today:
– U.S. weekly mortgage applications (4pm Dubai time), ADP’s employment change (5:15pp), ISM services PMIs (7pm), EIA’s weekly energy inventory estimates (7:30pm), Fed’s Beige Book (11pm)
o Earnings from Broadcom and others
– EZ services PMI (1pm), PPI and unemployment rate (2pm); UK services PMI (1:30pm)
