AUSTRALIA DATA: PMI Shows Positive Services, Cost/Selling Inflation Up Further

Risk off has risen a little more as this headline crossed: "*IRANIAN LAWMAKER NIKZAD RULES OUT NEGOTIATIONS WITH TRUMP: FARS" - BBG. Oil benchmarks are around session highs now, Brent to $102/bbl, up 2%, while WTI has risen 3%. US equity futures sit down around 0.30%, while the the USD is up 020% in BBDXY terms. AUD and SEK are the weakest performers (A$ back under 0.6990). gold is down around 1%, but has stabilized somewhat. 

• This follows the earlier headlines around Gulf States potentially joining the fight with Iran, while there have also been reports of damage to Iranian energy infrastructure assets. 

The S&P(ESM6) range overnight was 6483.50 - 6748.00, SPX closed +1.15%, Asia is currently trading around 6600. The S&P(ESM6) looked to be challenging the pivotal 6500 area when Trump’s comments saw an almost 4% surge higher in under 15 minutes. The timing of the comments was auspicious to say the least as risk looked about to crack and roll over in multiple asset classes. Oil(WTI) through $100, the USD(BBDXY) through 1215-1217 and NASDAQ below 24000, every one of them held and had significant reversals pushing the time line for any breaks further out. It was the first time we started seeing some actual distress in markets with Gold & Silver leading. The market will be looking for some details now on this potential off-ramp but it's the second time the market has had huge reversals on the back of a potential cessation to hostilities. This morning US futures opened slightly lower, E-minis(S&P) -0.10%%, NQZ5 -0.10%. On the day, the first resistance is back toward 6750-6800 and then 6900. The pace and ferocity of that move would have caught any shorts badly, but until I see a clear path for an off-ramp I would still be skewed toward fading rallies as the uncertainty for markets remains and Trump’s ability to talk the market up will fade unless he can show how this end to the conflict is to be achieved.

• Neil Sethi on X: “DB: Discretionary investors have now cut exposure to the lowest in 9 months, to levels last seen around the Iran bombing in June last year. Systematic strategies positioning also dropped to neutral (0.0sd, 40th percentile).”
• The Kobeissi Letter on X: “Turkey has been talking to Iranian officials and President Trump’s envoy Steve Witkoff in an attempt to secure a "brief ceasefire" for peace deal negotiations, per FT.”
• Bloomberg - "Apollo Caps Private Credit Fund Withdrawals As Requests Hit 11%.”
• The S&P 500 Index Average True Range(ATR) for the last 10 Trading days:  107 Points

Fig 1: S&P 500 Index Weekly Chart

Source: MNI - Market News/Bloomberg Finance L.P

Headlines have crossed from the WSJ that Gulf States, including Saudi Arabia, are considering joining attacks against Iran, see this link. It notes: "U.S. allies in the Persian Gulf are inching toward joining the fight against Iran, getting tougher following persistent attacks that have disrupted their economies and risk giving Tehran long-term leverage over the Strait of Hormuz." Adding, in relation to Saudi Arabia: "Crown Prince Mohammed bin Salman is now eager to re-establish deterrence and is close to a decision to join the attacks, the people said. It is only a matter of time before the kingdom enters the war, one of the people said." 

• Oil prices have firmed a little as these headlines crossed. WTI is back above $90/bbl, up around +2.3% for the session (we opened up at $88.78/bbl)/ Brent crude is up around 1.6% to $101.50/bbl. We remain well off Monday highs though.
• US equity futures are softer, but up from session lows. The USD is higher against all the majors, with AUD and NZD down around 0.30%.
• Also impacting sentiment was earlier headlines from Iran around energy infrastructure assets being struck is also likely aiding firmer oil prices. Via BBG: "A gas pressure-regulation station and an associated administrative building were targeted in Iran’s central Isfahan province in recent US–Israeli attacks, the semi-official Fars news agency reports."