MARKET WRAPS
Stocks:
European stocks were lower, as a lack of progress in U.S.-Iran negotiations and rising tensions in the Strait of Hormuz worried investors and boosted oil prices once again.
France's CAC 40 index was the only bright spot, as L'Oreal gained after posting expectation-beating sales.
Reuters reported late Wednesday that the U.S. intercepted at least three Iranian-flagged tankers in Asian waters, citing shipping and security sources.
"This is the first time the U.S.'s naval blockade has reached beyond the Strait of Hormuz," XTB said, adding it would obviously make peace talks tricky, and directly affect the flow of oil and trade around the world.
The WSJ reported that the expansion of U.S. interdictions thousands of miles beyond the blockade of Iran's ports is part of an effort to thwart shipments of Iranian oil to China.
ING said the stalemate raised concerns over the impact of prolonged supply disruptions through the Strait of Hormuz on products.
"If no progress is made, the market will become increasingly numb to the noise and headlines that have dictated price action recently."
Mediators are trying to get the diplomatic process back on track with a meeting between the U.S. and Iran potentially being held Friday.
Market Insight
Bond investors were still placing too much emphasis on inflation rather than growth , Jefferies said.
"We do think that the market needs to focus back on the growth impact."
Jefferies expects that neither the European Central Bank nor the Bank of England will be able to hike interest rates.
The recent bond market selloff has been driven more by technical and positioning factors rather than fundamentals, it added.
U.S. Markets:
U.S. stocks looked set to fall on Thursday as tensions around the Strait of Hormuz gave investors a good excuse to trim some of their holdings following a record-breaking rally for equities.
Forex:
The euro fell modestly after a key measure of German manufacturing and services activity swung into contraction in April.
The composite purchasing managers' index fell to a 16-month low of 48.3 in April from 51.9 in March. A level below 50 signals a contraction in activity while a level above that indicates growth.
The dollar rose as signs of continued tensions in the Iran war supported demand for safe-haven assets.
Iran attacked three ships in the critical Strait of Hormuz and escorted two of them to Iranian waters.
However, the White House press secretary said the attacks didn't constitute a violation of the cease-fire.
A deterioration in the terms of trade caused by a surge in oil prices would likely limit any yen recovery,
Mitsubishi UFJ Morgan Stanley Securities said.
The Norwegian krone rose to a three-year high against the euro and has outperformed this month as the equity market showed resilience and oil prices rose, ING said, adding that it could rise further.
Bonds:
European government bonds were little moved even after the latest eurozone purchasing managers' index survey came in weaker than expected.
Treasury yields rose amid the higher oil prices.
10-year OAT yields edged lower , trimming some of their rise, after the weaker-than-expected French flash estimate purchasing managers data for April.
ING identified room for short-tenor rates to fall with an eventual rebuild in the rate-cut narrative in the coming month, while long-tenor rates could remain under sticky upward pressure, at least in the coming month.
Capital Economics forecast the year-end level of the 10-year Treasury yield at 4.25% and said higher inflation made it unlikely the Fed would cut interest rates this year, but it expects rate cuts in 2027 under its baseline scenario.
It added that the rally in Treasurys was unlikely to gather much more momentum.
Energy:
Oil prices rose , with Brent crude above $100 a barrel as uncertainty over peace talks.
XS said the WTI crude oil price is shaped by a tug-of-war between expectations and actual data adding that the risk premium no longer solely dominated price action.
U.S. crude oil inventories rose by 1.9 million barrels recently, sharply diverging from expectations of a significant draw, and traders were beginning to price in the possibility of supply returning, should geopolitical tensions ease further.
"WTI is not currently in a clearly defined uptrend or downtrend, but rather in a phase of searching for equilibrium."
Gas
The benchmark Dutch TTF front-month contract rose 3.8% and was on track for a weekly gain of more than 6% as the standoff over the Strait of Hormuz threatened global supplies.
Europe was still importing large amounts of LNG above the seasonal average despite a recent fall in prices, encouraging more buying in South Asia and increased competition for shipments, ANZ said.
Meanwhile, the EU said it would allow more flexibility in gas storage filling rules as part of a proposed plan to mitigate the impact of volatile energy prices.
Metals:
Gold fell , pressured by a firmer dollar and higher oil prices.
"Persistent inflation risks from the prolonged energy shock have reinforced expectations that central banks may keep interest rates elevated for longer," MUFG said.
"As a result, gold continues to face headwinds."
EMEA HEADLINES
As Iran Talks Stall, Mediator Pakistan Tries to Keep Hopes Up
ISLAMABAD, Pakistan-Pakistan had hoped for another windfall of global good will as it prepared to host a new round of peace talks between the U.S. and Iran this week, locking down its capital for the second time in a month in the hope that the warring sides could make a deal. But this time, after the principal players were no-shows, disappointment has set in and businesses are counting their losses.
On Sunday, Pakistani authorities increased security and blocked most access to secure areas of Islamabad. The authorities posted armed guards on pickup trucks along the airport's road and requisitioned the venue used for the first round, the Serena Hotel.
Fear of Shortages Boosts Global Factories, But Eurozone Activity Declines
Factories in parts of Asia and Europe have reported a pickup in activity as they rushed to meet orders placed by customers anxious to avoid price hikes and shortages should the conflict in the Middle East prove long-lasting, according to business surveys released Thursday.
With the conflict in its seventh week, the Strait of Hormuz remains closed, restricting transport of oil and natural gas and threatening the supply of a host of other raw materials, including those essential for fertilizers, and helium, which is crucial for chip making.
Jet Fuel Is Running Out in Europe. Why Your Summer Travel Plans Are at Risk.
A jet fuel shortage is leading airlines to cut flights, and could cause a severe slowdown in travel this summer-particularly in Europe.
German carrier Lufthansa said this week it is canceling 20,000 flights from now through October, immediately reducing its flight schedule by 120 trips a day. Reductions are happening all over, including at the company's hubs in Frankfurt, Munich, Zurich, Vienna, Brussels, and Rome.
Roche Backs Full-Year View as Quarterly Sales Rise
Roche confirmed its full-year guidance after reporting a first-quarter rise in sales driven by high demand for its innovative medicines and diagnostics.
The Swiss pharmaceutical giant said Thursday that sales rose 6% at constant currency to 14.72 billion Swiss francs ($18.76 billion) for the first three months of the year. Analysts were expecting group sales of 14.73 billion francs, according to a Visible Alpha consensus.
Shares of Apple Supplier STMicroelectronics Jump After Strong Quarter
STMicroelectronics shares surged after the European chip maker posted strong first-quarter sales and said revenue growth from artificial intelligence should accelerate in coming months as tech giants plow billions into data centers.
The European chip maker, which counts Apple and Elon Musk's Tesla and SpaceX among its major clients, said revenue climbed 23% on year to $3.10 billion, above company guidance of about $3.04 billion and analysts' forecast of $3.06 billion, according to Visible Alpha.
GLOBAL NEWS
U.K. Budget Deficit Was Smallest Since Pandemic
The U.K. government narrowed its budget deficit for the fiscal year that ended at the start of April, but further progress in reducing borrowing is likely to be challenging if the conflict in the Middle East is prolonged.
As elsewhere, the Covid-19 pandemic was extremely costly for the government, which has struggled to reduce the gap between spending and revenues after an initial drop as the economy reopened.
Air War in Iran Gives Way to Crippling Stalemate in Hormuz
ISLAMABAD, Pakistan-The conflict with Iran has entered a damaging new phase-a crippling limbo between war and peace that leaves the Strait of Hormuz closed and the prospect of escalation looming.
The missiles and bombs that the U.S. and Israel rained down on Iran and Tehran's retaliatory salvos might have stopped with President Trump's indefinite extension of a cease-fire. But the battle for control of the strait, one of the most important conduits of global commerce, is raging, leaving commodity traders on edge and helping push international oil prices above $100 a barrel on Wednesday.
Pete Hegseth Fires Navy Secretary John Phelan
John Phelan has been fired as Navy secretary after months of simmering tension with Defense Secretary Pete Hegseth, according to U.S. officials.
His departure was revealed in a social-media post by Pentagon spokesman Sean Parnell. In the post, Parnell said Hegseth and Deputy Defense Secretary Steve Feinberg were "grateful to Secretary Phelan for his service to the Department and the United States Navy."
Predictions Marketplace Fines Three Candidates for 'Political Insider Trading'
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04-23-26 0525ET
