MARKET WRAPS
Watch For:
No major economic events expected; trading updates from Volvo Car
Opening Call:
European stock futures traded lower early Thursday. Asian stock benchmarks lost ground; the dollar strengthened; Treasury yields were up; while oil futures rose and gold weakened.
Equities:
Futures tied to all three major U.S. indexes slid during President Trump's primetime address, chipping away at some of the strong gains in recent days.
Trump signaled further military strikes against Iran, reviving concerns over supply disruptions in the Middle East and undermining appetite for risk assets.
The U.S. is "going to hit them extremely hard over the next two to three weeks. We're going to bring them back to the Stone Ages, where they belong." Trump suggested that the U.S. military operation could end within a month.
The activity Wednesday evening suggests that a topsy-turvy stretch of trading will likely continue. "You get a whiff of good news, or a whiff of progress and people are quick to re-risk," said Tom Keen, a derivatives trader at Piper Sandler.
Forex:
The U.S. dollar strengthened, after Trump signaled more attacks against Iran, including military strikes on Iran's power plants if Tehran doesn't reach a deal to end fighting with the U.S.
"The idea that any swift resolution will see a return to pre-conflict relations and a normalization of vessel flow through the Strait of Hormuz is unlikely," CBA Global Economic and Markets Research said.
Bonds:
Sovereign debts have taken a major hit amid the war in the Middle East. However, bond prices have been rising in recent days, as traders have realized that higher oil prices might endure, hurting consumer and business spending.
"Even in a quick resolution we look for markets to price increasing risk of recession. This in turn should pull down 10-year yields [in most G-10 markets] within a month or two," Wells Fargo macro strategy head Michael Schumacher wrote.
Energy:
Oil futures turned higher, after notching losses in early Asian trading. The market "had been trading on anticipation," said Stephen Innes, managing partner at SPI Asset Management. "But when Trump spoke, he did not validate that future. He disrupted it."
"So oil did what oil always does when the illusion cracks. It surged, not because the war suddenly worsened, but because the market had prematurely priced in the expectation that it would end," Innes said.
Metals:
Spot gold slid into the red, giving up gains in early Asian trading. Any hope that there would be some clear guidelines on how the conflict in Iran would end were dashed after Trump's speech, said ANZ senior commodity strategist Daniel Hynes.
"That has seen risk appetite take a blow," he said. "While gold is likely to remain beholden to the market's level of risk appetite, I do feel the focus is starting to shift from monetary policy outcomes to how the economic backdrop will look," Hynes said. That should ultimately be supportive for gold, he said.
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Iron ore fell in early Asian trading. Prices are expected to trade within a narrow range in the near term, with both downside support and significant upward pressure at play, Nanhua Futures analysts said.
A narrowing in the May-September iron ore spread suggests that expectations of near-term spot tightness are easing. However, prices haven't fallen sharply, likely due to expectations for an end to the conflict in Iran, a recovery in steel demand and strong hot metal output, Nanhua added.
TODAY'S TOP HEADLINES
Trump Tries to Sell Americans on War in Iran
WASHINGTON-President Trump sought to reassure skeptical Americans that the war in Iran is in the national interest, arguing that the operation was necessary to decimate a regime threatening the U.S. and insisting that economic pain would be short-lived.
In a 20-minute address from the White House, his most direct sales pitch to the nation since the war began a month ago, Trump said the U.S. had succeeded on the battlefield and declared that U.S. military objectives would be completed "very shortly."
Trump Expected to Overhaul Steel, Aluminum Tariffs
WASHINGTON-The Trump administration is preparing to reshape its steel and aluminum tariff regime, altering duties on finished products to help simplify compliance. The net effect of the changes could effectively raise costs for many imports.
U.A.E. Is Revoking Visas, Stranding Iranian Residents Abroad in a Widening Crackdown
DUBAI-The United Arab Emirates has launched a broad crackdown on Iranians in the country, including canceling visas and closing institutions to protest Tehran's daily drone and missile attacks.
Several Iranian families in Dubai say they have relatives who have lived in the U.A.E. for decades whose visas were suddenly revoked, sometimes while they were traveling, leaving them unable to return.
Musk's SpaceX Files to Go Public in One of the Biggest IPOs Ever
Elon Musk's SpaceX is one step closer to staging what could be the largest initial public offering of all time.
The satellite builder and rocket operator has confidentially filed IPO paperwork with the Securities and Exchange Commission, according to people familiar with the matter. SpaceX is aiming for an IPO that could raise between $40 billion and $80 billion, The Wall Street Journal has reported.
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Expected Major Events for Thursday
04:30/NED: Feb Retail turnover
06:00/ROM: Feb PPI
06:30/SWI: Mar CPI
07:30/EU: Mar EuroCOIN indicator of euro area economic activity
08:00/ITA: Feb Retail Sales
09:00/CYP: Feb Retail trade
09:00/CYP: Mar CPI
10:00/IRL: Mar Irish Live Register latest monthly figures
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This article is a text version of a Wall Street Journal newsletter published earlier today.
(END) Dow Jones Newswires
04-02-26 0027ET
