US futures are mixed, first dropping overnight to session lows after Iran vowed to escalate its retaliation against US strikes and avenge the US sinking of an Iranian warship as the conflict entered its sixth day, before spiking to session highs after Bloomberg reported that Iran had previously signaled a willingness to eliminate its uranium stockpiles in return for “something good” during talks with the US before the strikes began (although the remarks related to earlier negotiations, the headlines were enough to shift sentiment which however faded in the absence of a signal from Washington). As of 8:00am ET, S&P futures were down 0.2%, but off session lows; Nasdaq futures dropped 0.1% despite a 7% jump in AVGO shares after earnings with Mag7 lower. Cyclicals outperform Defensives led by Fins / Energy. Brent briefly pared an advance before resuming its climb above $83 a barrel amid increasing disruptions to energy markets from the war and after China was said to have told its largest refiners to suspend exports of diesel and gasoline. European stocks were little changed. A benchmark for Asian equities trimmed its rebound of as much as 3.8%. The dollar rose 0.2%, 10-year TSY yields rose for a fourth straight day, trading above 4.13%. Commodities are higher led by Energy; base leading precious metals and Ags have a mild bid. Arab states across the Persian Gulf reported interceptions of Iranian missiles and drones. Today’s macro data focus is on Challenger Job Cuts (pay attention to AI-induced layoffs) and Jobless Claims ahead of tomorrow’s NFP / Retail Sales prints.

In premarket trading, Mag 7 stocks are mixed: Meta received a downgrade at Arete, which said that the social media giant is “lagging” in terms of AI monetization. Shares are down 0.4% (Microsoft +0.2%, Tesla -0.09%, Nvidia -0.2%, Alphabet +0.6%, Apple shares are unchanged, Amazon -0.3%)

In other corporate news, Marsh and Aon, two of the world’s largest insurance brokers, are in talks with the US government on a plan to help insure tankers navigating the Strait of Hormuz. KPMG is said to be nearing a decision to appoint Gary Wingrove as the next global CEO.

Developments in the US-Israeli war against Iran are once again driving traders to curb risk after sentiment picked up in the previous session. Stress in energy markets is increasingly coming to the fore, with China seeking to conserve fuel and Japanese refiners calling for the release of strategic petroleum reserves. While Iran military commander Amir Heydari told state TV on Thursday the vital Strait of Hormuz isn’t closed, traders and analysts still expect it will take weeks before oil flows can resume meaningfully.

“If it is blocked for more than a week, the risk of sustained high energy prices would become real,” said Roberto Scholtes, head of strategy at Singular Bank. “If it is resolved quickly, the economic and financial impact would likely be negligible.”

For markets, any sign of the conflict easing is being jumped on, but concrete news is hard to come by. A report that Iran signaled in recent talks it was ready to relinquish its uranium stockpiles caused a brief spike which rapidly faded. The reaction shows the market’s bias to seize on anything approaching positive news, Bloomberg notes. The comments were made in an interview last night and look to be based on pre-conflict talks. Traders are also reassessing the “Sell America, Buy Asia” tradebecause of Asia’s outsize reliance on fuel shipments through the Strait of Hormuz.They’re also looking at 2022 playbooks — though JPMorgan strategists reckon that the anticipated inflation shock from Iran looks “a lot more contained” than after Russia’s invasion of Ukraine. The VIX futures curve returned to contango after having inverted earlier in the week, a sign of some tension leaving the equity market. For Citadel's flow guru Scott Rubner,now is the time to turn bullish on equities, while KKR co-CEO Scott Nutall is making a “shopping list” of opportunities to capitalize on market volatility.

The global bond selloff showed no respite, with the 10-year Treasury yield up three basis points to 4.13% while losses in Europe were steeper as Germany’s bunds headed for their worst week in a year on fears of an inflationary energy supply shock. Traders continued to dial back expectations for Federal Reserve interest-rate cuts as inflation expectations build and data reinforce the resilience of the economy.

As of now, “macro expectations have not materially repriced,” said Francisco Simón, European head of strategy at Santander Asset Management.“The risk scenario would be a combination of higher energy prices and a visible slowdown in activity, which would complicate the policy outlook and weigh on risk assets.”

Europe's Stoxx 600 is up 0.4%,reversing earlier declines following a report that Iran told the US before the war started that it was ready to get rid of its stockpile of highly enriched uranium. Gains are led by utilities, retail and media shares. Here are some of the biggest movers on Thursday:

Earlier in the session,. Asian stocks rebounded as risk sentiment improved following a three-day selloff spurred by concerns over the conflict in the Middle East. The MSCI Asia Pacific Index rose as much as 3.8%, the most since April 10, with chipmakers Samsung, TSMC and SK Hynix among the biggest boosts. South Korea led advances,with the Kospi notching its best gain since 2008, bouncing back after its worst daily rout on record.Most key regional gauges were in the green. While traders are still gauging the length and impact of the Iran war, some investors are coming back into the market amid more palatable valuations after the recent selloff. Continued gains in oil remain a concern given the potential to accelerate inflation and quash Federal Reserve plans to lower interest rates. Stocks rose in China and Hong Kong after the government unveiled economic targets that market participants said were in line with expectations. That came as Beijing kicked off its annual “Two Sessions” meetings, which investors are closely watching in hopes of supportive policies.

Source: ZeroHedge News