Equity futures tumbled as escalating Middle East tensions and unclear policy signals drove investors toward safety, boosting oil prices and Treasury yields while attention shifts to upcoming labor market data.
Stock futures fell early Thursday as investor sentiment turned sharply negative following renewed uncertainty over the Iran conflict. U.S. President Donald Trump’s latest remarks offered little clarity on a potential resolution, instead signaling continued military action. The lack of a clear de-escalation path rattled markets, with tech stocks poised for significant losses in the final trading session of a shortened week ahead of the Good Friday holiday.
Here’s how the futures are trading:
- The E-mini S&P 500 futures (ES): down 1.58%
- The Nasdaq futures (NQ): down 2.01%
- The Dow E-mini futures: down 1.40%
This marked a reversal from the positive sentiment witnessed in the previous two sessions on the hopes that the Iran conflict would soon end.
Crude oil futures (both Brent and WTI) climbed sharply, the former over 8% and the later over 9%, as traders factored in a potential prolonged supply disruptions due to continued Strait of Hormuz blockade.
The 10-year U.S. Treasury note yield rose 3.1 basis points.
What’s behind the extreme risk aversion? In a livestreamed speech, Trump suggested the U.S. wouldl intensify their efforts, while also stating that Operation Epic Fury, the codename for the current Middle East operations, would be completed shortly. “I can say tonight that we are on track to complete all of America's military objectives shortly, very shortly. We are going to hit them extremely hard over the next 2 to 3 weeks.”
The shifting stance of the president, who earlier hinted that the U.S. was ready to end the “Operation Epic Fury” mission in two to three weeks, worried the market, sending risky bets lower.
Saxo Head of Commodity Strategy Ole Hansen said Trump failed to deliver a “coherent message.” It was a “speech that raised more questions than answers—particularly regarding how he intends to address the mess he has created,” he said.
Focus on Jobless Claims: Traders now turn their attention to the weekly jobless claims data due ahead of the market open. A strong data (drop in claims or claims aligning with expectations) would raise the odds of a rate hike at the Federal Reserve’s April rate-setting meeting.
A trio of reports released Thursday reaffirmed the U.S. economy’s resilience: Retail sales rose more than expected in February, ADP private payrolls expanded more than expected in March and the U.S. manufacturing activity was better than expected.
On Friday, which happens to be a market holiday, the Labor Department is scheduled to release the monthly non-farm payrolls data. The market will only be able to react to the report when trading resumes after the long weekend on Monday.