US futures tumbled and oil surged as the war in Iran showed little sign of deescalating over the weekend and led to more major Middle East producers curbing output. Still, futures retraced more than 50% off the overnight lowsas WTI nearly touched $120 overnight, the highest since 2022, before dropping back to around $100 after a report G7 countries may release 300 million to 400 million barrels, or around 25% to 30% of the 1.2 billion barrels in strategic reserve.As of 8:00am ET, S&P futures are down 1%, although well off session lows, having tumbled as much as 2% earlier before the SPR news hit; in pre-market trading, Mag7 names are weaker, but certain AI plays are positive pre-mkt with Energy the standout sector and Defense bid higher, too. Generally, Defensives over Cyclicals. Bonds deepened losses while the dollar hit its highest level since January. Bond yields are higher, bear flattening, but Treasuries are outperforming global peers with European bonds in freefall due to fears of a spike in inflation driven by higher gas prices; Commodities are stronger led by Energy with all segments / sub-segments higher ex-precious metals which are being sold to fund margin calls in oil. WTI Crude futures have pared an increase of as much as 31% to about 13% but remain highest since 2022 as the war in the Middle East restricts supply via the Strait of Hormuz. Today's US economic data slate includes February New York Fed 1-year inflation expectations at 11am. Reports ahead this week include CPI, personal income and spending (includes PCE price indexes), 4Q GDP revision, JOLTS job openings and industrial production

In premarket trading, oil and gas companies are extending gains during the turmoil in energy markets. Among movers: Chevron (CVX) +0.7%, Exxon (XOM) +0.8%, APA (APA) +2%. Magnificent Seven stocks are all lower (Alphabet -1.4%, Amazon -1%, Meta Platforms -1.2%, Microsoft -1.1%, Tesla -1.8%, Apple -0.7%, Nvidia -0.8%).

In corporate news, billionaire Leo KoGuan doubled his stake in Nvidia to 2 million shares. Live Nation Entertainment is said to be close to settling a federal antitrust lawsuit accusing the company of illegally monopolizing the live music industry. Hims & Hers Health shares are surging in premarket trading after Novo Nordisk was said to have ended its public feud with the company with an agreement to sell its drugs on the Hims platform. Vertiv, Lumentum, Coherent and EchoStar will join the S&P 500 in the latest quarterly rebalance, S&P Dow Jones Indices said Friday. The companies will replace Match, Molina Healthcare, Lamb Weston and Paycom Software.

The spike in oil and losses in bonds and equities were initially steeper, but news that Group of Seven finance ministers would discuss a possible joint release of oil from reserves - just hours after we said this should happen - trimmed the moves

Hello@ENERGYit's time to open the SPR

Still, the selling is adding fresh stress to markets as the US and Iran dug in for what could become a prolonged conflict. Iran’s new supreme leader, Mojtaba Khamenei, signaled Tehran won’t back down, while President Donald Trump said higher oil prices were a “very small price to pay” for safety.

“The market is anticipating the worst-case scenario,” said David Kruk, head of trading at La Financiere de l’Echiquier in Paris. “The selloff is all about oil, it’s about the inflation that is deduced from it, it’s about the risk of stagflation.”

Arab states across the Persian Gulf and Israel continued to face incoming missiles and drones from Iran, which said it had the capacity to sustain the war for months. Israel struck fuel depots in Tehran and threatened the Islamic Republic’s power grid. Trump is also weighing the option of deploying special forces on the ground to seize Iran’s near-bomb-grade uranium, according to three diplomatic officials briefed on the matter.

The stock market’s reaction has so far been restrained, with hopes lingering that strikes will remain contained in scope and time, said Wolf von Rotberg, equity strategist at Bank J Safra Sarasin.

“We have not yet seen markets capitulate,” von Rotberg said. “As oil infrastructure has been hit over the weekend, a prolonged rise in oil prices becomes more likely and a quick reversal of recent moves becomes increasingly difficult.”

Source: ZeroHedge News