U.S. Futures Advance While Oil Pulls Back on Hopes of Iran Conflict De-Escalation

Index Update:  U.S. equities pared earlier losses as investors assessed the potential impact of the U.S.–Iran conflict on energy prices and government spending. Stock index futures rose about 0.4% after reports that Iranian officials had reached out to the U.S. for dialogue, raising hopes of easing tensions.

Market Movers:  On Tuesday, the top gainers were Battalion Oil Corporation (+134.58%), followed by Edesa Biotech, Inc. (+90.79%). On the contrary, Abundia Global Impact Group Inc. (-33.82%), and Power Solutions International, Inc. (-28.97%) declined the most the same day.

Commodities Update:  Oil prices eased on Wednesday after a sharp rally driven by Middle East tensions. WTI crude slipped below USD 75 per barrel, while Brent crude moved toward USD 82 per barrel, as reports suggested Iran had indirectly contacted the U.S. to discuss terms for ending the conflict, raising hopes of de-escalation. Despite the pullback, markets remain focused on supply risks, with disrupted traffic through the Strait of Hormuz, halted output from some producers, and an attempted attack on Saudi Arabia’s Ras Tanura refinery. The U.S. also signaled it could provide insurance and naval escorts for energy shipments, highlighting ongoing concerns over regional energy infrastructure and shipping security. Gold and silver rebounded on Wednesday as investors monitored escalating Middle East tensions. Gold rose above USD 5,160 per ounce, while silver climbed back above USD 84 per ounce, recovering from recent losses after safe-haven demand returned amid the ongoing U.S.–Israeli conflict with Iran.

Macro Updates:  U.S. mortgage applications increased 11% in the final week of February, marking one of the strongest weekly readings since 2022, according to the Mortgage Bankers Association. The rise was supported by lower Treasury yields and stable mortgage rates, as investors moved toward safer assets. Refinancing applications surged 14.3%, reflecting sensitivity to interest rate movements, while applications for home purchases rose 6.1%. Meanwhile, the average rate on 30-year fixed mortgages remained unchanged at 6.09%, near its lowest level since 2022, encouraging more borrowers—particularly those with larger loans—to refinance and reduce monthly payments

Bonds Commentary:  The U.S. 10-year Treasury yield rose 1 basis point to 4.09%, marking its third straight daily increase, though gains moderated after reports that Iran signaled willingness to discuss ending the conflict. Bond markets remain under pressure as rising energy prices linked to the Iran conflict heighten inflation concerns, reducing expectations for near-term Federal Reserve rate cuts. Markets now anticipate the first rate cut in September instead of July, while still pricing in two 25-basis-point cuts before the end of the year

Futures Update:  U.S. stock index futures moved higher on Wednesday, reversing earlier declines after reports suggested Iran may seek peace, raising hopes of easing Middle East tensions. Dow Jones Futures rose 110 points (0.2%), S&P 500 Futures gained 20 points (0.3%), and Nasdaq 100 Futures advanced 90 points (0.4%), reflecting improving investor sentiment.

After another sell-off at the start of trading on Tuesday, stocks attempted a recovery but were less successful than on Monday, ultimately finishing the day significantly lower. The S&P 500 fell 65.01 points, or 0.94%, closing at 6,816.62. From a technical perspective, the index found support at lower levels and ended the session near its intraday high, suggesting the potential for further upside in the near term. However, the major moving averages remain above the current price and have begun to flatten following a prolonged uptrend, which could limit additional upward momentum. Meanwhile, the 14-day Relative Strength Index (RSI) has slipped below the midpoint, reinforcing a cautious short-term outlook. Immediate support is seen around 6,750, which may serve as a short-term bounce zone, while near-term resistance is located near 6,920.