U.S. stock futures for the three major indices were lower in pre-market trading on Thursday, April 9. At the time of writing, Dow Jones futures fell 0.43%, S&P 500 futures declined 0.38%, and Nasdaq futures dropped 0.36%. European markets also saw declines, with Germany's DAX index down 0.94%, the UK's FTSE 100 falling 0.35%, France's CAC 40 decreasing 0.93%, and the Euro Stoxx 50 losing 1.03% at the time of writing. In commodity markets, WTI crude oil rose 5.25% to $99.37 per barrel, while Brent crude increased 4.18% to $98.71 per barrel.
Market attention is focused on Iran's recent announcement that all vessels transiting the Strait of Hormuz must obtain permission from its military. As the Trump administration and Iran engage in disputes over the interpretation of a two-week ceasefire agreement, the situation in Iran has again become highly uncertain. Although both sides plan face-to-face talks in Islamabad, Trump insists that U.S. forces will "not withdraw" from Iran and surrounding areas, threatening full-scale war to compel Iranian compliance with the agreement. Iran, in turn, demands that Israel cease attacks on Lebanon as a precondition for negotiations. More critically, Iran's requirement for military clearance for Hormuz transit represents a substantive blockade that directly threatens approximately one-fifth of global daily oil supplies. Consequently, Brent crude futures remain elevated amid volatility. Sustained high energy costs are not only dampening market expectations for interest rate cuts but also increasing pressure on the Federal Reserve to maintain restrictive interest rates.
The Personal Consumption Expenditures (PCE) price index release tonight may lead the Fed to maintain its current stance. With rebounding goods prices and rising energy costs, U.S. inflationary pressures are resurging. Market consensus predicts that the upcoming February PCE data will show price increases still above the Fed's long-term 2% target, potentially forcing the central bank to keep rates high at the upcoming policy meeting. Economists forecast a 0.4% month-over-month increase in the February PCE index, a notable rebound from January's 0.3% rise. Year-over-year, the PCE index is expected to rise 2.8%, matching the previous reading. The core PCE index, excluding volatile food and energy, is projected to increase 0.4% monthly and 3.0% annually, indicating strong inflationary persistence. If Thursday's PCE report confirms stubborn inflation, expectations for "later and fewer" rate cuts will be firmly established.
The U.S. government is expected to extend sanctions waivers on Russian oil this week, potentially paving the way for similar exemptions for Iranian oil. According to reports, former Treasury and State Department officials indicated that the Trump administration may extend waivers on Russian oil sanctions, a move that could precede similar measures for Iranian oil. Last month, the Treasury Department approved sales of previously sanctioned Russian and Iranian oil already in transit, with waiver deadlines of April 11 and April 19, respectively. Treasury Secretary Besant explained that the latter measure is a strategic response to minimize economic impacts from the Iran conflict, predicting it would boost global supply and lower oil prices. Several former sanctions officials stated they still expect the Trump administration to extend the Russian oil waiver this week, which would facilitate an extension for Iranian oil later this month.
BlackRock warns that markets are underestimating the impact of Middle East conflicts, with significant room for downward revisions in U.S. stock earnings expectations. Helen Jewell of BlackRock recently stated that corporate earnings forecasts need to be lowered due to inflationary effects from Middle East hostilities. The fundamental equity international chief investment officer at the world's largest asset manager noted, "Current earnings forecasts for this year remain in the double digits—15%, 16%, 17%, 18%—so there is considerable room for downward revisions." She added that stable earnings projections for the consumer sector are "difficult to justify, especially given current interest rate levels and inflationary impacts from the Middle East situation." Early signs of softening optimistic earnings expectations are already emerging in markets.
Despite ceasefire talks, fragility remains. Goldman Sachs warns that if the Strait of Hormuz remains closed for another month, Brent crude could average above $100 per barrel for the full year. Goldman's base case assumes energy transit through the Strait of Hormuz will gradually resume this weekend, with Persian Gulf exports returning to pre-conflict levels over one month. Under this scenario, Brent is projected to average $82 per barrel in the third quarter and $80 in the fourth. An alternative scenario involving a longer closure and partial capacity loss projects higher averages: $120 in Q3 and $115 in Q4.
In corporate news, FedEx (FDX) reached a preliminary agreement with its pilots' union, increasing hourly wages by approximately 40%. The agreement, negotiated since May 2021 with the Air Line Pilots Association, will raise pilot wages by about 40% by 2026, followed by 3% annual increases from 2028 to 2030. Captains will receive up to $150,000 in back pay, while first officers will get up to $102,500. The union stated the preliminary agreement will be reviewed by FedEx's master executive committee and was negotiated under the supervision of the National Mediation Board.
Apple (AAPL) unusually signed a three-year exclusive agreement with Samsung Display for foldable OLED panels for its planned foldable iPhone, as other suppliers currently cannot meet requirements. Samsung Display will begin mass production in Q2. Sources indicated Samsung proposed the exclusive arrangement due to competition between Apple and Samsung's mobile business, requiring a "justifiable reason" to supply key components to Apple.
Pacific Investment Management (Pimco) plans to sell part of its $14 billion debt financing for Oracle's (ORCL) large data center under construction in Michigan. The Saline campus will receive $16.3 billion in total financing, with about 15% as equity investment. The remainder will be raised through bond issuance by a special purpose vehicle. Pimco will provide funding, with the transaction expected to close on April 17. Blackstone plans an additional $2 billion equity investment. Bond documents show a 19.5-year maturity and 14-year weighted average life, offering yields approximately 1 percentage point higher than Oracle's existing debt.
Key economic data and events scheduled include U.S. Q4 real GDP annualized quarter-over-quarter final reading, February wholesale inventories month-over-month preliminary reading, personal spending month-over-month, PCE price index year-over-year, and initial jobless claims for the week ending April 4 at 20:30 Beijing time. February wholesale inventories month-over-month final reading follows at 22:00 Beijing time. The Fed balance sheet for the week ending April 8 will be released at 04:30 the next day. IMF Managing Director Georgieva will deliver opening remarks at the IMF/World Bank Spring Meetings at 22:00 Beijing time.
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