Public Markets 8-Hour Briefing
×Market Turmoil Amid Middle East Conflict
US stock futures pointed to a down day to end a volatile week, as soaring oil prices and the specter of energy supply shocks from a protracted war in the Middle East fanned inflation fears. The S&P 500 fell sharply as traders awaited the monthly jobs report, with oil heading for its biggest weekly gain since the early Ukraine war.
Labor Market Disappoints
US nonfarm payroll employment unexpectedly fell in February, marking the first decline since 2020. The disappointing report boosted expectations for Federal Reserve interest-rate cuts this year, despite a recent rise in oil prices that threatens to fuel inflation.
Private Credit Under Pressure
BlackRock limited redemptions at its private credit fund as outflows swelled, taking the decision after withdrawal requests at its flagship HPS Corporate Lending Fund surged to 9.3% of net asset value. Meanwhile, direct lenders have taken control of nearly 150 companies in Europe after they could no longer afford to pay their debts, according to Goldman Sachs.
Energy Markets in Crisis
Kuwait cut oil production as storage fills up, signaling a broader storage crisis that poses new risks to the global market. US gasoline pump prices advanced to the highest level at any time under President Trump, with the conflict in the Middle East disrupting energy supplies.
Corporate Earnings Underwhelm
Retail sales sagged in January, extending a tepid trend for US shopping since late last year. Large-cap consumer discretionary companies posted their weakest earnings season in almost six years, as high fixed costs, softer demand and still-elevated prices weighed on results.
Shipping Routes Disrupted
Maersk and Hapag-Lloyd temporarily halted key shipping lanes amid the Iran conflict, disrupting trade flows. The container shipping groups halted navigation of key routes into and out of the region as the fallout from the war continues to impact global commerce.
Defense Sector Benefits
German defense technology company Vincorion is planning to list in Frankfurt, looking to tap investor appetite for defense stocks in an increasingly unstable world. The conflict has upended long-held assumptions in Gulf markets, pushing investors to factor in new dangers.
Currency and Bond Markets React
Euro-area GDP expanded less than initially reported at the end of last year, with trade weighing on growth. Treasuries rallied after the disappointing payroll report, while the dollar is among the few major assets to have rallied this week.
Insurance Costs Soar
London-based reinsurers of ships are canceling their coverage of war risk and demanding 200% more to reinstate policies after a US submarine sank an Iranian warship. The conflict has triggered a scramble for air defense interceptors needed to stop drones and missiles targeting cities and critical infrastructure.
Asia Markets Weather Storm
Chinese markets held up better than their Asian peers during the global market selloff caused by the war in Iran. Meanwhile, Japan and Canada aim for deeper energy ties during Prime Minister Carney's visit to Tokyo, pledging to expand energy trade and military cooperation.
Corporate Governance Issues
BP asked shareholders to vote against a call for more disclosures, as investors have been critical of the company's increased expenditure on oil-and-gas assets. In the US, Western Alliance Bancorporation filed a lawsuit against Jefferies Financial Group after being informed that $126.4 million in forbearance payments would not be made.