Trump Fails To Jawbone Market As Futures, Bitcoin Tumble; Oil And Yields Soar

Futures are sharply lower, erasing modest overnight gains and trading near session lows as Brent crude futures are back above $110 a barrel after erasing an earlier fall and knocking broader risk sentiment off course in the process. There didn’t appear to be a single catalyst for the oil turnaround, although a steady stream of drone and missile attacks in the Middle East will have played a role and erased what little optimism Trump's 10 day delay to an Iranian energy plant strike may have prompted, a move which is now widely seen as a smokescreen to get more US troops - and potentially Gulf allies - behind a ground invasion of one or more Iranian islands in the Persian Gulf. As of 8:00am ET S&P futures down 0.3% despite the initial spike in equities after Trump announced another delay in the ceasefire deal; with March coming to a close, the Iran war has driven WTI oil toward its best month since 2020 and stocks to their worst since 2022. Nasdaq futures slide 0.6% as equities, rates and commodities all reverse the immediately reactions. Pre-market, Mag 7 are all red Bond yields added another 3-5bp led by the long-end: 10y yields +4.8bp rising to 4.47%. Oil went up again with WTI now over $96 (+2.2% since yesterday’s close). Base metals are mostly lower (Copper -1.4%), while precious metals also reverse earlier gains.

In premarket trading, Mag 7 stocks are all red following a sharp drop in the Nasdaq 100 Thursday, as concerns over a prolonged Middle East conflict weigh on sentiment (Apple -0.1%, Nvidia -0.1%, Amazon -0.5%, Meta -0.8%, Tesla -0.5%, Microsoft -0.4%, Alphabet -1%)

Argan Inc. (AGX) rises 10% after the power plant-builder reported earnings per share and revenue for the fourth quarter that beat the average analyst estimate. JPMorgan raises its rating on the stock to overweight, saying the results were strong with EPS “well ahead” of expectations.
Rocket Pharmaceuticals (RCKT) rises 12% after the FDA approved the drug developer’s Kresladi for the treatment of severe Leukocyte Adhesion Deficiency Type I — a rare white blood cell disorder — in pediatric patients.
Two Harbors Investment (TWO) slips 2% after agreeing to be acquired by CrossCountry.
Unity Software (U) jumps 11% after the company reported preliminary first-quarter earnings. The results showed significant strength in Vector, the company’s AI-driven advertising unit, according to analysts.

In corporate news, Anthropic won a court order blocking a Trump administration ban on government use of its AI tech, arguing the move could cost it billions in lost revenue. The company behind the Claude chatbot is considering an IPO as soon as October, as it races rival OpenAI to market. And Brown-Forman, the owner of Jack Daniel’s, and France’s Pernod Ricard are discussing a merger as the alcoholic drinks industry looks at ways to weather a downturn.

“After several glimmers of hope, fueled by comments from President Trump, which were quickly dashed, the market is becoming more demanding in terms of rhetoric,” said Amélie Derambure, senior multi-asset portfolio manager at Amundi. “The TACO trade is more difficult to do because a return to square one is not possible from here.”

Optimism about the latest deadline extension for Tehran to reach a deal quickly faded as Trump no longer can jawbone market, and as a result S&P 500 futures gave back early gains to trade at session lows as US traders walk in, after Thursday saw the most bruising session for US stocks since the conflict began. Messages about the war remain mixed. Trump again delayed his deadline for Iran to agree to a ceasefire deal or face more attacks, saying talks with Tehran were going “very well”. Meanwhile, the WSJ reported that the Pentagon is looking at sending as many as 10,000 more ground troops to the Middle East. At the same time, Israel said it would escalate and expand its attacks on the Islamic Republic. The conflict has inflicted damage to energy infrastructure across the Gulf and effectively shut a vital artery for oil and gas shipments. Traders fear a broadening impact on energy supplies and oil prices, stoking fears of an inflationary spiral that could force central banks to tighten monetary policy.

“Trump is unpredictable, so one doesn’t know whether he’s gaining time to send troops to invade the Strait of Hormuz or to negotiate further,” said Nicolas Domont, a fund manager at Optigestion in Paris. “The war could stop anytime and things could return to normal within a few months but one could also end up with oil at $200 in six months.”

Turning back to markets, Bloomberg notes that tech’s pullback leaves the Nasdaq’s forward price to earnings valuation premium over the S&P 500 at just 4.4%, the smallest since January 2019. As recently as October, the premium stood at 35.7%.

Also weighing on sentiment was China’s move to open a trade probe into the US ahead of an expected summit between Trump and President Xi Jinping. China’s investigations into US trade practices signaled the country’s retaliation against similar probes by the Trump administration. The move is a direct mirror of steps Trump took to revive his tariff agenda after the Supreme Court last month struck down some of his duties.

“China has learnt that a confrontational approach on trade produces the most favorable outcome in negotiations,” said Wolf von Rotberg, equity strategist at Bank J Safra Sarasin. “The reciprocal action China has launched should be seen as a move to stake out its territory ahead of the Trump-Xi meeting.”

Trump is set to address a Saudi sovereign wealth fund-backed investment conference in Miami, as the Iran war drives WTI oil toward its best month since 2020 and stocks to their worst since 2022.

In Europe, the Stoxx 600 is down 0.9% with media, industrial and energy shares leading declines. Chemicals and health care outperform. Here are the biggest movers Friday:

AstraZeneca shares rise as much as 3.8% after the drugmaker said its experimental drug for chronic obstructive pulmonary disease — a deadly lung condition also known as COPD — helped reduce the worsening of symptoms in two late-stage trials
Enagas shares rise as much as 15%, the most in six years, after Spanish regulator CNMC unveiled a draft proposal for gas companies that JPMorgan says is surprisingly positive
JM gains as much as 5.2% after SEB Equities upgraded the Swedish construction and real estate development group to buy from hold and said stock prices in zero valuation creation from the land bank
SOL shares gained as much as 11% in Milan trading, the most since March 2020, as some analysts increased their price targets on the industrial and medical gases manufacturer, citing solid full-year financial results
Netcompany gains as much as 11% after upgrading its adjusted Ebitda margin guidance, with the Danish IT services provider citing “delivery excellence and implementation, supported by the ongoing embedding of AI capabilities”
Dino Polska plummets by as much as 18% after Polish food supermarket chain posted its thinnest quarterly Ebitda margin as cut-throat cost competition continued among the industry
CTS Eventim slumps as much as 17%, with JPMorgan saying that while full-year results met expectations, the set-up for the ticker seller is more mixed for 2026
Harbour Energy shares drop as much as 9% after German chemical giant BASF sold shares at a discount to Thursday’s closing price
Future Plc shares fall as much as 14% on Friday after the publisher was downgraded to hold from buy by Jefferies, which said the company faces dual headwinds from both AI and social media content

Earlier in the session, Asian stocks fell on Friday, staying on course for a fourth-straight weekly loss, as concerns over the wide-ranging economic impact of the Middle East war deterred risk-taking. Down 1.8% so far this week, the MSCI Asia Pacific Index is heading for its longest stretch of weekly declines since November 2024. The region’s tech-heavy markets of South Korea and Taiwan led Friday’s selloff, while the sector was also the biggest drag on the benchmark gauge. That’s after Meta Platforms and Alphabet drove a selloff in the US on Thursday. “The situation is becoming more and more complex and problematic,” Jasmine Duan, senior investment strategist at RBC Wealth Management Asia, said in a Bloomberg Television interview. The firm has reduced its positioning in Asian equities since the onset of the war as “Asian economies in general will be affected more by the energy crisis,” she added.

In FX, the Bloomberg Dollar Spot Index rises 0.1%. The Swiss franc is the weakest of the G-10 currencies, falling 0.3% against the greenback. The pound falls a few pips despite stronger-than-expected UK retail sales data.

In commodities, Brent crude futures are back above $110 a barrel after erasing an earlier fall and knocking broader risk sentiment off course in the process. There didn’t appear to be a single catalyst for the oil turnaround, although a steady stream of drone and missile attacks in the Middle East will have played a role. Stocks and bonds fell as a result, with China’s move to open a trade probe into the US also likely weighing on sentiment. Precious metals advance. Bitcoin loses 2.9%.

In rates, the fall in Treasuries has pushed US 10-year yields up 5 bps to a year-to-date high at 4.46%. Treasuries hold losses in early US session amid steeper declines for European bonds, particularly UK gilts, where long-end yields are 12bp higher on the day. US yields resumed rising with oil prices, erasing the late-Thursday drop that followed US President Trump pushing back a deadline for striking Iran’s energy infrastructure by 10 days. US yields are 2bp-5bp higher across a steeper curve, with 2- to 10-year tenors having reached fresh yearly highs and 30-year approaching 5%, last seen in July; 2s10s and 5s30s spreads are ~3bp and ~1bp wider respectively. Gilts lead a selloff in European government bonds with UK 10-year borrowing costs rising 11 bps. In UK curve-steepening selloff, 30-year yields peaked at 5.69%, highest since September. Fed-dated OI contracts price in around 20bp of rate hikes by the end of the year, the most hawkish point in the current cycle; about 3bp of tightening is priced in for the April meeting.

US economic data calendar includes March final University of Michigan sentiment (10am) and March Kansas City Fed services activity (11am). Fed speaker slate includes Barkin (11am), Paulson (11:30am) and Daly (11:30am)

Market Snapshot

S&P 500 mini -0.3%
Nasdaq 100 mini 0.6%
Russell 2000 mini -0.5%
Stoxx Europe 600 -0.9%
DAX -1.1%
CAC 40 -0.6%
10-year Treasury yield +5 basis points at 4.46%
VIX +1.2 points at 28.63
Bloomberg Dollar Index little changed at 1216.36
euro little changed at $1.1522
WTI crude +1.7% at $96.05/barrel

Top Overnight News

Trump said that Iran asked him to extend the pause and in a certain sense, we've already won, while he added that Iran made a request to him through his people and had asked for seven days, but he gave 10 days because of Hormuz 'gift'. Iran was very thankful.
Mediators said Iran hasn’t requested a 10-day pause on strikes on its energy plants and is yet to deliver a final response to a 15-point plan to end the war: WSJ.
US is considering sending up to 10,000 additional ground troops to the Middle East: WSJ.
Iran and Israel Keep Up Attacks After Trump Extends Deadline: BBG
Iranian officials are interested in negotiations despite the announcement of their rejection of the US proposal, while mediators are pressuring Tehran to agree to a meeting with Washington in the coming days: Axios.
"Things are progressing very slowly" in terms of negotiations between the US and Iran, as it stands, no meeting has been scheduled between senior officials: i24's Stein reports;
Iran's IRGC Navy announced that the Strait of Hormuz is closed, and any traffic in this strait will be severely dealt with; traffic of any ship "to and from" the ports of origin of the allies of the enemies is prohibited from any corridor.
Iran Blocks Two Chinese Ships From Hormuz in Rare Move: WSJ
U.S. and Israel Have Pounded—but Not Eliminated—Iran’s Missile Threat: WSJ
US deploys uncrewed drone boats in conflict with Iran: Reuters
Trump is weighing several options for dramatically escalating the war against Iran should his latest push for diplomacy fail: CNN.
Senate Passes Homeland Security Deal After Airport Delays; the vote comes hours after Trump said that he signed an Emergency Order directing the homeland security secretary to pay Transportation Security Administration agents: Reuters.
China Starts Trade Probes Against US Before Xi-Trump Summit: BBG
Trump is scheduled to deliver remarks at Future Investment Initiative at 17:30EST on Friday and will participate in MAGA Inc meeting at 18:30EST on Saturday, while he will deliver remarks to farmers at 12:30EST on Sunday.
Oaktree to Meet 8.5% Private Credit Fund Redemptions in Full: BBG
Wall Street Says Stocks Are Too Cheap to Ignore Despite War: BBG
BofA's weekly flow report noted USD 2.7bln into bonds, USD 35bln out of cash, USD 29bln out of stocks, USD 6.3bln out of gold, USD 0.5bln out of crypto.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks were cautious but off worst levels with headwinds seen following the tech and comms-led selling stateside, and despite US President Trump's 10-day extension to the Strait of Hormuz deadline. The delay extends the pause on strikes against Iran's energy facilities through to April 6th, which Trump said was due to a request by Iran, which had wanted a 7-day extension, but he gave them 10 due to Iran's Hormuz 'gift'. Nonetheless, mixed signals persisted as mediators stated that Iran had not made a request for a 10-day extension, while it was also reported that the US is considering sending up to an additional 10k ground troops to the region and that Trump is weighing several options for dramatically escalating the war if his latest diplomacy efforts fail. ASX 200 marginally declined with underperformance seen in tech, real estate and gold miners, while a lack of fresh catalysts outside of geopolitics and the absence of data kept price action subdued. Nikkei 225 retreated at the open and briefly dipped below the 53,000 level following the recent upside in oil and yields, but has since clawed back nearly all of the losses. Hang Seng and Shanghai Comp shrugged off the initial indecision as participants digested a slew of earnings releases, while it was also reported that China's Commerce Minister Wang met with USTR Greer and said that China is willing to strengthen economic and trade cooperation with the US.

Top Asian News

Japan's government approves a five-year science and tech plan and is to invest JPY 60tln in science and tech over five years, while it set JPY 180tln public-private investment target.
Japanese Finance Minister Katayama announces measures to ensure stable business funding and will hold a meeting on financial aid amid the Middle East crisis. Will hold G7 Finance Ministers' online meeting and will take decisive steps on Forex.

European bourses (STOXX 600 -1.0%) start Friday's session entirely in the red, reversing the modest pre-cash gains. This comes following China's MOFCOM launching new US probes and recent geopolitical flare ups. European sectors are mainly in the red. Media and Retail sit at the bottom of the pile, while Health Care posts modest gains as AstraZeneca supports the sector.

Top European News

UK Retail Sales MoM (Feb) M/M -0.4% vs. Exp. -0.8% (Prev. 1.8%, Low. -1.0%, High. 1.1%).
UK Retail Sales YoY (Feb) Y/Y 2.5% vs. Exp. 2.1% (Prev. 4.5%, Low. 1.8%, High. 4.4%).
UK Retail Sales ex Fuel YoY (Feb) Y/Y 3.4% vs. Exp. 2.9% (Prev. 5.5%).
UK Retail Sales ex Fuel MoM (Feb) M/M -0.4% vs. Exp. -0.8% (Prev. 2%).
UK Gfk Consumer Confidence (Mar) -21 vs. Exp. -24 (Prev. -19).

DXY is incrementally firmer, and is currently trading within a 99.90-100.04 range. Focus remains on the geopolitical situation after US President Trump announced a 10-day pause in planned strikes on energy plants, adding that talks with Iran are going very well. Though WSJ reported that the Iranians are demanding that the US dial back on demands made in the 15-point ceasefire plan. Earlier today, there was a barrage of Iranian attacks on several Gulf countries, and interestingly, the IRGC announced that the Strait of Hormuz is shut, having turned away three ships of different nationalities.
G10s are mixed against the USD, with some mild strength seen in the Antipodeans, whilst the CHF lags a touch. The former appears to be a slight rebound following the hefty losses seen in the prior session. EUR and GBP are both incrementally lower against the USD this morning. Price action is in stasis as traders await any definitive developments heading into the weekend. There was some data for both pairs to digest this morning, but ultimately had little impact. Spanish inflation (Mar) rose at its fastest pace since 2024, amidst the Iranian war (but did miss expectations), whilst the UK’s Retail Sales topped expectations – though the survey period was before the Iranian war had begun.
Elsewhere, the JPY is essentially flat against the USD, though price action has been volatile this morning for a number of factors. Overnight, Japanese Finance Minister Katayama provided some jawboning, which helped to strengthen the JPY. She suggested that she will take decisive steps on forex, including bold actions. USD/JPY troughed at 159.45 as markets digested her comments, though the pair rebounded off lows in the APAC session. The pair then took a leg higher as the European session got underway to make a peak at 159.97, approaching the touted “line in the sand” at 160.00. Some traders may see physical intervention as ineffective at this stage given the turbulent geopolitical environment, which could push the pair beyond the 160.00 mark. Moreover, ING opines that recent pressure in USTs may lead to less support from the US Treasury to conduct rate checks/intervention, given large-scale FX intervention could extend the Treasury sell-off.

Fixed Income

A bearish session for fixed income as tensions remain high and rhetoric/reporting/activity around the Middle East ramps up into the weekend. As it stands, the main thing we are attentive to is any sign of a 'last strike' or ground incursion by the US.
Initially, benchmarks were only modestly lower as crude was only USD 0.30-40/bbl into the green. However, throughout the morning, on reports of attacks at US military bases, Hormuz remaining closed, and continued reporting around a possible ground incursion, energy has lifted to the detriment of fixed income.
USTs at a 109-27+ base, lower by c. 10 ticks, notching a fresh WTD and contract low. Similarly, Bunds are at a 124.28 base with downside of 70 ticks at most, also marking a WTD and contract low. Finally, Gilts are directionally in-fitting but with magnitudes larger, as has been the case in recent days. As above, the benchmark is at a WTD and contract low of 85.91, with losses of over a full point at most.
Finally, Spanish preliminary CPI wasn't as hot as expected this morning for March, though the figure did come in markedly above the prior rate, with the headline a full point higher vs the prior; no move to the data. Within the series, INE wrote that the evolution of prices was "mainly due to the rise in prices of fuels and lubricants for personal vehicles."; i.e. signs that the Middle East situation is filtering through. Ahead, participants, as is the ECB, are particularly attentive to any signs of second-round inflationary effects.
Italy sells EUR 5bln vs exp. EUR 4.0-5.0bln 2.85% 2031 and 3.45% 2036 BTP & EUR 3.5bln vs exp. EUR 2.5-3.5bln 1.468% 2035 CCTeu.

Commodities

Crude initially fell after Trump paused attacks on Iran’s energy sector and signalled ongoing talks, but prices later turned higher, with Brent briefly topping USD 104/bbl (USD 99.01-104.18/bbl range) and WTI near USD 97/bbl (USD 92.08-96.75/bbl range). Dutch TTF prices trade flat intraday but remain at elevated levels north of EUR 55/MWh.
Gold rose after Trump extended the Iran deadline, with bullion rebounding to around USD 4,450/oz after Thursday’s near 3% decline. The yellow metal came off its best levels as the USD strengthened amid the tilt to risk aversion in the early European morning.
Copper is on track for its first weekly gain this month, supported by hopes that US efforts to end the Middle East war may avert a broader hit to global growth, though uncertainty over negotiations and potential troop deployments remains, whilst Iran continues attacks on US bases across the region. Further, China opened two probes against the US: 1) regarding trade practices, and 2) regarding green products. The probes are to conclude within six months but can be extended, MOFCOM said. 3M LME copper resides in a USD 12,138.00- 12,333.95/t range.
India has reportedly sought a US waiver to purchase Russian LNG.
India's Oil Minister said government has taken a huge hit on tax revenues to ensure very high losses of oil companies at the time of sky-high international prices are reduced.
Japanese PM Takaichi says some respite will be given to LNG via the permit of additional coal use
Japanese Trade Minister Akazawa said firms are mulling oil supply sources such as Central Asia, and not ruling out any options for all supply sources.
Australia PM Albanese said the country's fuel supply looks safe in the coming months.
New Zealand Finance Minister said no current need for fuel restrictions and government updates national fuel plan with a four-phase response framework, said New Zealand is well-positioned for global shocks.
Outage said to have occurred at Chevron (CVX)-operated Wheatstone platform, causing suspension of LNG and gas production.
Shanghai International Energy Exchange is to diversify deliverable crude stream for crude oil futures; Buzios crude oil and Djeno crude oil will be added as deliverable crude stream.

Trade/Tariffs

China's Commerce Ministry said it has launched a probe regarding US trade measures and measures that hinder trade in green products; China to investigate US trade practices starting March 27th; probe to conclude within six months but can be extended.
China's MOFCOM spokesperson, on the US probes, said will take relevant measures based on the probe's findings.
China's Ministry of Commerce (MOFCOM) said China and the US should properly handle the relationship between competition and cooperation. China and the US should maintain close communication, look forward together, and promote healthy, stable, and sustainable development of bilateral economic and trade relations. China is willing to strengthen multilateral and regional economic and trade cooperation with the US. China expressed serious concern regarding US Section 301 investigations against multiple economies, including China.
China's Commerce Minister Wang Wentao is said to have met with US Trade Representative Greer to discuss China-US trade relations.
China's Commerce Minister said they are willing to expand imports from the EU and hopes the EU relaxes curbs on high-tech products. China is concerned about some EU members abusing industrial policies and violating subsidy discipline.
China and EU auto industry bodies sign an MoU to promote cross-border data flow, state media reported.

Central Banks

Fed's Barr (voter) said he has particular concern for long-run inflation expectations, adds the longer inflation remains above 2%, the greater the risk that it becomes entrenched. In a good place to hold rates and assess incoming data. The economy has remained resilient through a series of shocks, but these have complicated the Fed reaching its 2% inflation goal. It makes sense for the Fed to take time to assess economic developments before further policy changes. Extended war could have broad impact on prices and the economy. If the Middle East conflict ends soon, the economic impact could be limited, but broader implications remain if it persists.
Fed's Jefferson (vice chair) said sustained high energy prices could worsen inflation and spending outlook, also noted trade policy and geopolitical tensions pose inflation risks. Current policy is appropriately positioned.
Fed's Cook (voter) said uncertainty is elevated and balance of risks are largely on net in balance, adds sees inflation risk greater now as a result of the war in Iran and that it could have a substantial effect on inflation.
Fed's Miran (voter) said Fed could cut balance sheet by USD 2tln without market turmoil, adds easing liquidity regulations could aid balance sheet cuts and Fed balance sheet reduction could take several years.
BoJ said using the latest data, Japan's estimated neutral rate was in the range of around -0.9% to +0.5%; BoJ is presently adjusting degree of monetary accommodation towards a sustainable and stable 2% target. Given uncertainty surrounding estimates of the natural rate of interest, it is necessary to assess the degree of monetary accommodation in comprehensive manner, carefully examining economic activity, prices, and financial developments.
EU ECB Consumer Inflation Expectations (Feb) 2.5% (Prev. 2.6%). 97% of the responses were recorded before the onset of the war in the Middle East on 28 February; Median consumer perceptions of inflation over the past 12 months remained unchanged.
ECB's Muller says ECB may not need full visibility of second round effects to act.
ECB's Patsalides said there is not sufficient information now to make a decision on whether to look through inflation surge or to raise rates, but will not hesitate to hike. Longer-term inflation expectations are well anchored. Economy still developing along the baseline.
BoE announces a simplification and reduction in the Discount Window Facility (DWF) pricing, as part of its previously announced review of the DWF. This Market Notice confirms lower and fixed pricing for DWF drawings against each collateral set, which will be set at 15bps for Level A collateral, 25bps for Level B collateral and 50bps for Level C collateral.
UBS now sees the RBA hiking rates twice more to lift the Cash Rate to 4.60%.
UBS expects the ECB to deliver two 25bp hikes in June and September this year (vs prev. forecast of unchanged).

Geopolitics

Iran's IRGC Navy announced that the Strait of Hormuz is closed, and any traffic in this strait will be severely dealt with; traffic of any ship "to and from" the ports of origin of the allies of the enemies is prohibited from any corridor.
US President Trump is weighing several options for dramatically escalating the war against Iran should his latest push for diplomacy fail, according to CNN.
US President Trump said that Iran asked him to extend the pause and in a certain sense, we've already won, while he added that Iran made a request to him through his people and had asked for seven days, but he gave 10 days because of Hormuz 'gift'. Iran was very thankful.
US is considering sending up to 10,000 additional ground troops to the Middle East, according to WSJ.
"Things are progressing very slowly" in terms of negotiations between the US and Iran, i24's Stein reports; as it stands, no meeting has been scheduled between senior officials.
Iranian officials are interested in negotiations despite the announcement of their rejection of the US proposal, while mediators are pressuring Tehran to agree to a meeting with Washington in the coming days, according to Axios.
Mediators said Iran hasn’t requested a 10-day pause on strikes on its energy plants and is yet to deliver a final response to a 15-point plan to end the war, according to WSJ.
"Iran, in order to reach a decision to end the war, basically does not receive the right signals from the US", IRNA reported.
US VP Vance reportedly told Israeli PM Netanyahu during a phone call a few days ago that his assessments of the development of the war in Iran and the prospect of toppling the regime were too optimistic, Israeli N12 reports.
US VP Vance is expected to be the main US negotiator in any potential peace discussions with Iran, Axios reports.
The US has fired more than 850 Tomahawk cruise missiles in four weeks of war with Iran, raising concern among some Pentagon officials about limited supplies, WaPo reports
Iran's IRGC called on people in West Asia to urgently leave areas where American forces are stationed.
Iranian Foreign Minister Araghchi said Iranian defence shall persist as long as needed.
UN Security Council has scheduled a closed consultation on Iran for Friday morning at the request of Russia, according to Times of Israel.
Semafor writes "Why Trump’s latest Iran moves may signal ground troops". “The [administration] has played this same move three times in just one year,” said Jonathan Hackett, a former Marine Corps interrogator and special operations capabilities specialist. “Trump has also not ordered large-footprint military assets in either of his presidencies without actually using those forces.”.
Explosions were heard at a site behind Mount Safah in Isfahan, central Iran, according to Al Hadath citing Iranian media; "Bombing a site near the Abadan refinery, southwest of Ahvaz".
Sources report explosions caused by an attack on American bases in Saudi Arabia, Tasnim reported.
Explosions reported today at American bases in Kuwait, Qatar, Saudi Arabia and Bahrain, Iran's ISNA reported.
Explosions heard in Tehran, while a report also noted the bombing of a Revolutionary Guard headquarters in the city of Kashan, central Iran.
Explosions sound in Iran's capital Tehran, according to Al Jazeera.
"Kuwait Ports Corporation: Shuwaikh Port was attacked by drones, which caused material damage without human injuries", via Sky News Arabia.
Reports of a drone attack on the headquarters of the US military in Kuwait, IRIB News reported.
Arab sources report missile attacks against American bases in the UAE, according to SNN.
Iranian Revolutionary Guard said they targeted oil tanks and depots and an Israeli army site in Ashdod, according to Al Jazeera.
Informed military source announced the new strategic plan of Iran's armed forces in accordance with the developments in the field and, referring to the role of the UAE and Bahrain in supporting the recent US threat of a ground attack on Iranian islands.
UAE pushes for international force to reopen Hormuz, according to FT.
Russia's President Putin asks oligarchs to contribute to budget amid soaring costs of Ukraine war, according to FT.

US Event Calendar

10:00 am: United States Mar F U. of Mich. Sentiment, est. 54, prior 55.5
11:00 am: United States Fed’s Barkin Speaks on Economic Outlook
11:30 am: United States Fed’s Paulson Speaks on Macroeconomics and Monetary Policy
11:30 am: United States Fed’s Daly Speaks at Monetary Policy Conference

DB's Jim Reid concludes the overnight wrap

This time last year I went on a two week holiday just as Liberation Day hit and today is my last day before this year’s equivalent. Last year’s wasn’t really a holiday with all the commotion, and given the pressing deadlines in the Iranian conflict I’m not sure this one will be either. Henry and Peter will be keeping you up to date in my absence. If you don’t hear from me for two weeks consider that as very good news for markets and vice-versa.

Markets were approaching the end of the week in a nervous mood as they have tended to do as we near the weekends in this conflict with risk premium being added. A bit of that premium has been taken out overnight though after Trump posted that he would extend by 10 days his pledge not to attack Iran’s power plants, with his earlier 5-day deadline having been due to expire today. This came after the S&P 500 had posted its worst day (-1.74%) since the Iran war began. S&P futures are up +0.56% as I type this morning. Similarly, Brent crude is trading -0.55% at $107.42/bbl, reversing a small portion of yesterday’s +5.66% rise. So we’ve seen only a mini easing of the market tension that drove 10yr bund yields to post-2011 highs yesterday. Similar bond market stress is also being felt in Asia this morning, where Japanese 10yr JGB yields are +7.7bps higher as I type. The USD/JPY has also retreated over the last 24 hours to come within touching levels of 160 for the first time since 2024. Japan’s Finance Minister Katayama said overnight that some of the moves are “speculative”, driven by oil-related trading. Given the use of the “speculative move” label is often used to justify intervention, the market is understandably putting some stock in these comments with the sell-off slightly easing.

Asian equities are more in wait and see mode with the Hang Seng (+0.83%) and CSI 300 (+0.70%) higher but with the KOSPI (-0.55%) and Nikkei 225 (-0.10%) weaker. Part of the KOSPI’s weakness is also due to the ongoing sell-off in South Korean chipmaker stocks from Google’s memory chip announcement.

Recapping that Trump post just after the US equity close, the President said he was “pausing the period of Energy Plant destruction by 10 Days to Monday, April 6”. He claimed that this was done “as per Iranian Government request” and that “talks are ongoing and… they are going very well”. While a kneejerk reaction saw Brent fall by as much as $4.50/bbl in response, most of this move proved fleeting, and Brent crude is currently trading within touching distance of the level it was at before Trump’s post. While the delay might reduce some of the immediate escalation risk, it offers no new visibility on the path towards resolution, given Iran’s denials over talks, and while the Strait of Hormuz remains largely closed.

More concrete signs of talks would surely be taken positively by investors, but they also have to grapple with the potential for further escalation, with the Wall Street Journal reporting last night that the US was considering sending as many as 10,000 additional troops to the Middle East. Indeed, growing fears of escalation drove a more negative market mood yesterday, not least as Trump had earlier sounded more doubtful on the prospects of a deal, saying that he didn’t know “if we’re willing to work on a deal with Iran”, and that he “didn’t care” when asked by reporters if he wanted to end the war. Admittedly, we did hear from Iran’s Tasnim news agency that they’d responded to the US 15-point ceasefire proposal and were waiting for the US to respond.

Yesterday’s fears about fresh escalation prompted global equities to sharply reverse their gains from recent days. Both the S&P 500 (-1.74%) and the Nasdaq (-2.38%) saw the biggest declines since the start of the war and fell back to their lowest levels since September, while the VIX index (+2.11pts) rose to 27.44pts, its highest since March 6. Part of that selloff was also driven by the ongoing rout from Tuesday’s announcement that Google had found a new algorithm that could reduce the memory chip amount needed in AI models. The news caused the Philadelphia Semiconductor Index to fall -4.79%, while the Mag 7 also fell -3.17%, bringing its YTD decline to -13.3%. Nvidia (remember them?) fell -4.16%. Meanwhile in Europe the STOXX 600 (-1.13%), DAX (-1.50%), FTSE 100 (-1.33%) and CAC 40 (-0.98%) were also all weak.

Growing fears of a stagflationary shock also weighed on bond markets, with some huge moves for European sovereigns in particular. In fact, yesterday saw 10yr bund yields (+11.5bps) post their biggest daily jump in a year, back when the government announced the historic reforms to the debt brake last March. Moreover, that pushed the 10yr bund yield up to 3.07%, its highest closing level since mid-2011, back when the Euro crisis was in full swing. And it was a similar story elsewhere, with 10yr OATs (+14.9bps) seeing their biggest daily jump in over a year, reaching a post-2009 high of 3.80%.

Those moves came as investors dialled up the chance of faster central bank rate hikes once again. So for the ECB, the probability of an April rate was back up to 73%. And over at the Fed, a hike is now more than 50% priced as soon as the October meeting. That came as we also heard from ECB President Lagarde, who said in an interview with The Economist that markets may be too optimistic on the Iran situation, with the fallout from the damage potentially taking years to undo. In the meantime, US Treasuries also witnessed aggressive moves, with the 10yr Treasury (+8.1bps) picking up to 4.41%, its highest close since July, whilst the 2yr yield (+9.9bps) hit its highest since June, at 3.99%.
Looking forward, today we’ll get the first of the Euro Area’s flash inflation figures for March with the Spanish release, which will be the first to reflect the conflict’s impact on energy prices, so stay tuned for that. That comes ahead of Germany’s release on Monday, before the Euro Area-wide release on Tuesday. In light of the ongoing conflict, our European economists have updated their inflation forecasts, seeing headline HICP rising to +2.58% y/y in March (vs +1.89% previously).

Otherwise yesterday, Norway’s central bank held their deposit rate at 4% as expected, but markets took the decision in a hawkish light after they signalled a rate hike was likely at an upcoming meeting. So markets are now pricing in 43bps of hikes by the August meeting, up from 28bps the previous day, and the Norwegian Krone was the second-best performing G10 currency on the day after the US dollar.

Finally, in a parallel universe the markets were closely watching the latest US data, with initial jobless claims inching up a touch to 210k, in line with consensus, while continuing claims came in at 1.819m (vs. 1.849m expected).

To the day ahead now, we’ll get the US March Kansas City Fed services activity, UK February retail sales. Central bank events include the ECB consumer expectations survey, and the Fed’s Daly and Paulson will speak.

Today's Top Stories