- Investors’ attention is shifting away from earnings season toward Iran. All signs suggest Iran has violated the ceasefire by shelling the UAE and a number of vessels in the Strait of Hormuz. Many investors are convinced that full-scale hostilities could resume soon, which is weighing on equity indices and supporting energy commodity prices.
- U.S. indices are down just under 1% amid geopolitical concerns. The biggest declines are seen in the Dow, whose futures at times drop by more than 1%. The Nasdaq is holding up best, limiting losses to below 0.3%.
- More questions are also emerging around U.S. debt. U.S. Treasury yields are posting noticeable increases, particularly in the 1–5 year maturities. John Williams attempted to calm sentiment at the Federal Reserve’s New York conference—the local Fed president said the U.S. economy is well prepared for uncertainty and risk.
- GameStop (GME.US), a company often associated with the so-called “meme stock” category, announced its intention to acquire the eBay platform. Analysts point to the company’s limited ability to finance the takeover. The stock initially rose by more than 6%, but as the session progressed it reversed course and ended down more than 7%.
- Palantir (PLTR.US) will report earnings after the U.S. market close. The market expects a double-digit improvement in profitability and commentary addressing concerns about the long-term growth pace in the commercial segment.
- U.S. macro data surprised to the upside. Durable goods orders rose in line with expectations by 0.8%, but factory orders accelerated by 1.5% month-on-month versus expectations of just 0.5%.
- On the back of Middle East tensions, nearly all major European indices posted significant losses. Spain led declines—by the end of the day, IBEX futures were down as much as 3%.
- Sentiment in the manufacturing sector is much better than on the stock market. European manufacturing PMIs surprised to the upside across most of the bloc, with nearly all countries managing to lift their PMI above the 50-point level. The euro area aggregate came in at 52.2 points.
- In FX markets, the Australian dollar is making a notable move. AUD is down more than 0.6% against the U.S. dollar, mainly as a result of weaker-than-expected inflation data. A similar tone can be observed in the New Zealand dollar.
- In commodities, investors’ focus is on oil. Given the risk of a full-scale conflict resuming in the Strait of Hormuz, Brent crude is up nearly 5%, at times topping $114 per barrel. WTI is limiting gains to 3%, hovering around $105.
- Precious metals are lower: gold is down just under 2%, while silver is down 3%.
- Among agricultural commodities, cocoa is up more than 8% as traders price in the risk of fertilizer shortages necessary for cultivation, which could shift the supply-demand balance.
- Sugar is also rising, by 2%, as more sugarcane is being redirected toward ethanol production.
- Despite uncertainty, sentiment in crypto markets remains positive. Bitcoin has moved back above $80,000, up nearly 2%. Ethereum is up about 1.8%. Solana is paring gains to below 1%, holding around $85.
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