Stock Market Update

Equity futures point to a modestly higher opening this morning after stocks retreated in broad fashion yesterday amid another sharp spike in oil prices. The major averages all finished with losses wider than 1.0% as crude oil retested the $100 per barrel mark following comments from Iran's new Supreme Leader Mojtaba Khamenei's calls to keep the Strait of Hormuz closed. The major averages will enter today's action lower for the week and not far above their respective 200-day moving averages. 

Oil prices are seeing some relief this morning, which is likely contributing to the modest rise in equity futures. Currently, oil is down $1.77 (-1.9%) to $93.96 per barrel. 

Axios reported that President Trump told G7 members in a phone conference that "Iran is about to surrender," though the comments contradict the defiant tone that Iran has kept throughout the conflict. Additionally, The Wall Street Journal reported that Israeli intelligence officials believe the regime is not likely to fall soon. 

The conflict in Iran and the subsequent rise in energy prices have fueled inflation concerns, with the market now unsure if it will get a single 25-basis point rate cut this calendar year. Investors have an important inflation reading this morning in the January Personal Income (Briefing.com consensus 0.4%) and Spending (Briefing.com consensus 0.2%) reports, which includes the PCE Price Index (Briefing.com consensus 0.3%), the Fed's preferred inflation gauge. The January report will not reflect the recent surge in energy prices, though a hotter-than-anticipated print would be particularly damaging to the market's rate cut hopes. 

In corporate news:

• Airfares are increasing amid the rise in fuel prices, according to The Wall Street Journal.
• Adobe (ADBE 250.44, -19.34, -7.2%) beat EPS expectations by $0.19, beat revenue expectations, and guided Q2 EPS and revenues above consensus. The company's CEO will transition from his position after a successor has been appointed
• Meta Platforms (META 631.41, -6.66, -1.1%) is delaying the introduction of a new AI model, according to The New York Times. 

Reviewing overnight developments:

Equity indices in the Asia-Pacific region ended the week on a broadly lower note. Japan's Nikkei: -1.2%, Hong Kong's Hang Seng: -1.0%, China's Shanghai Composite: -0.8%, India's Sensex: -1.9%, South Korea's Kospi: -1.7%, Australia's ASX All Ordinaries: -0.1%.

In news:

• Japan's Finance Minister Katayama said that she is in close contact with her counterparts in the U.S. after the Japanese yen hit its lowest level against the dollar since July 2024.
• U.S. Trade Representative Greer will join Treasury Secretary Bessent for next week's meetings with China's Vice Premier He.
• India is seeing urea from China while South Korea will limit exports of naphtha products.

In economic data:

• China's February New Loans CNY900.0 bln (last CNY4.71 trln) and total social financing CNY2.38 trln (last CNY7.22 trln)
• Hong Kong's Q4 Industrial Production 5.7% yr/yr (last 5.4%)
• New Zealand's February Business PMI 55.0 (expected 55.1). January External Migration & Visitors 4.1% yr/yr (last 1.6%)

Major European indices are on track for a mixed finish to the week. STOXX Europe 600: +0.1%, Germany's DAX: +0.1%, U.K.'s FTSE 100: +0.1%, France's CAC 40: -0.1%, Italy's FTSE MIB: +0.3%, Spain's IBEX 35: +0.3%.

In news:

• The U.K. reported no growth for January, inviting concerns about potential stagflation that would prevent the Bank of England from cutting rates.
• Germany's Chemicals Industry Association suspended all forecasts for the year, warning that the sector is facing mounting disruptions.
• The EU Commission released a statement assuring that its gas storage and oil stocks remain stable.

In economic data:

• Eurozone's January Industrial Production -1.5% m/m (expected 0.6%; last -0.6%); -1.2% yr/yr (expected 1.4%; last 2.2%)
• Germany's February WPI 0.6% m/m (expected 0.3%; last 0.9%); 1.2% yr/yr (last 1.2%)
• U.K.'s January GDP 0.0% m/m (expected 0.2%; last 0.1%); 0.8% yr/yr (expected 0.9%; last 0.7%). January Industrial Production -0.1% m/m (expected 0.3%; last -0.9%); 0.4% yr/yr (expected 0.6%; last 0.5%). January Manufacturing Production 0.1% m/m (expected 0.2%; last -0.5%); 1.3% yr/yr (expected 1.5%; last 0.5%). January Construction Output 0.2% m/m (expected 0.0%; last -0.5%); -0.2% yr/yr (expected -0.1%; last -0.3%). January trade deficit GBP14.45 bln (expected deficit of GBP22.20 bln; last deficit of GBP10.99 bln)
• France's February CPI 0.6% m/m (expected 0.7%; last -0.4%); 1.1% yr/yr, as expected (last 0.4%)
• Italy's January Industrial Production -0.6% m/m (expected 0.4%; last -0.5%); -0.6% yr/yr (expected 0.8%; last 2.7%)
• Spain's February CPI 0.4% m/m, as expected (last -0.4%); 2.3% yr/yr, as expected (last 2.3%). February Core CPI 2.7% yr/yr, as expected (last 2.6%)