Stock Market Update

Equity futures point to a lower opening this morning as increased hostilities in the Strait of Hormuz have sent oil prices surging higher again. Stocks are coming off of a mostly lower finish yesterday that was also attributed to a rebound in oil prices. 

The Wall Street Journal reported that Iran is stepping up its efforts to halt traffic through the Strait of Hormuz after three more commercial ships were struck in the Persian Gulf. In particular, two oil tankers were attacked in Iraqi waters, according to Bloomberg. 

The fresh strikes largely offset recent measures aimed at mitigating the surge in oil prices and have prompted the market to reassess expectations for the duration of the conflict. Higher energy prices are also continuing to push back the market's expectations for the next rate cut, with the next meeting showing at least a 50% probability of a 25 basis point cut now being the September FOMC meeting, according to the CME FedWatch tool.

Oil is extending yesterday's rebound, currently up $5.23 (+6.0%) to $92.48 per barrel.

Energy developments continue to dominate headlines, though there is also a modest slate of earnings reports for investors to assess this morning. 

The market also has plenty of economic data to look forward to this morning, including January Housing Starts (Briefing.com consensus 1340K) and Building Permits (Briefing.com consensus 1392K) along with the January Trade Balance (Briefing.com consensus -$67.9 billion) and weekly initial jobless claims (Briefing.com consensus 215K). 

In corporate news:

• The Iran War could shift stock market leadership, according to Barrons. 
• Dollar General (DG 138.00, -6.84, -4.7%) beat EPS expectations by $0.27, reported revenues in-line, and guided FY EPS and revenues in-line.
• Morgan Stanley (MS 157.86, -3.03, -1.9%) and Cliffwater are capping withdrawals from private credit funds, according to Bloomberg. 

Reviewing overnight developments:

Equity indices in the Asia-Pacific region ended Thursday on a lower note with rising oil prices and reports of attacks on oil tankers in the Middle East weighing on sentiment again. Japan's Nikkei: -1.0%, Hong Kong's Hang Seng: -0.7%, China's Shanghai Composite: -0.1%, India's Sensex: -1.1%, South Korea's Kospi: -0.5%, Australia's ASX All Ordinaries: -1.4%.

In news:

• U.S. Trade Representative Greer said that a section 301 investigation into 16 trading partners has started. The investigation is expected to lead to a replacement of IEEPA tariffs.
• Japan will release 80 million barrels from state and private reserves and Prime Minister Takaichi said that there is no need for an extra budget to offset higher gasoline prices.

In economic data:

• Japan's Q1 BSI Large Manufacturing Conditions 3.8 (expected 5.3; last 4.7)
• Australia's May MI Inflation Expectations 5.2% (last 5.0%)
• New Zealand's Q4 Manufacturing Sales Volume -0.5% qtr/qtr (last 1.1%)
• India's February CPI 3.21% yr/yr (expected 3.10%; last 2.75%)

Major European indices trade on a mostly lower note amid ongoing worries about oil transit through the Strait of Hormuz. STOXX Europe 600: -0.2%, Germany's DAX: +0.2%, U.K.'s FTSE 100: -0.2%, France's CAC 40: -0.3%, Italy's FTSE MIB: -0.4%, Spain's IBEX 35: -0.8%.

In news:

• British travel booking service On the Beach suspended its guidance due to a significant slowdown in travel demand across the Eastern Mediterranean.
• Military contractor Leonardo reported strong results for Q4 and raised its guidance.
• BMW reported a drop in operating profit for 2025 and issued cautious guidance for 2026.

In economic data:

• Italy's Q4 Unemployment Rate 5.6% (expected 6.1%; last 6.1%)