Morning in New York: bulls welcome truce between US and Iran

Daily review and forecast of events on the U.S. stock market from Mikhail Denislamov, Deputy Director of Freedom Capital Markets Research.

Geopolitics continues to largely determine the dynamics on stock exchanges. A strong short-term positive momentum this time was the agreement on a two-week truce between Iran and the US with the opening of the Strait of Hormuz. Donald Trump agreed to postpone strikes on Iranian infrastructure, and the Islamic republic's authorities reiterated their readiness to ensure safe passage of ships. This caused a sharp drop in oil prices and a rise in stock futures.

At the same time, significant differences between the parties to the conflict remain. Previously, Tehran demanded the lifting of sanctions and compensation for war damage. In practice, this may mean the introduction of new fees for ships passing through the Strait of Hormuz and, as a consequence, an increase in transportation costs. In this regard, high energy prices may remain high for a long time. One way or another, the limited achievement of the goals of the military operation may have to be recognized as an acceptable outcome for the US. As Bloomberg notes, the White House has been under clear political and economic pressure to find ways to de-escalate. At the same time, reports of ongoing tensions in the Middle East region point to the fragility of the agreements reached.

Today, market participants will analyze in detail the minutes of the March meeting of the Federal Reserve System. Investors expect to get additional clarifications on how the regulator assesses the consequences of the recent energy shock and under what specific conditions it will be ready to return to the discussion of raising interest rates. In our view, the probability of new hawkish factors influencing the market is low, given Jerome Powell's recent soothing statements.

Futures on the S&P 500 are rising by 2.6%. Nikkei, Hang Seng and other APAC stock indices also showed strong growth. We assess the balance of risks for the upcoming session as positive with increased volatility amid a sharp decline in the geopolitical premium in oil prices. However, after active growth at the pre-market, the main positive by the beginning of the main trades may be already embedded in quotations, which will limit the upward potential.

- Levi Strauss (LEVI) shares are up more than 10% on the premarket on the back of strong first-quarter results. The company's net income increased to $177 mln from last year's $140 mln, while revenue rose 14% YoY to $1.74 bln. The company's own EPS guidance for 2026 was revised upward to $1.42-1.48.

- Quotes of Delta Air Lines (DAL) before the opening of the main session added more than 7%, shares of United Airlines (UAL) rose by more than 8%. The growth driver for air carriers was the correction in oil prices, which contributes to the reduction of fuel costs.

- Carnival (CCL) is up within 10% before the open, following the general dynamics in the travel & leisure sector. Lower fuel costs support optimistic short-term expectations of cruise operators' margins.

- Nutanix (NTNX) stock is adding about 3% in the premarket after announcing a $750 million increase in its buyback program, reflecting management's confidence in the company's current valuation.

- Shares of Greenbrier (GBX) are down about 6% amid the release of its quarterly earnings report, which showed its net income fell to $15 million from $51.9 million a year earlier and revenue fell 22.9% YoY to $587.5 million. The company's revenue guidance for the current year has been lowered to $2.4-2.5 billion and EPS has been lowered to $3-3.5.

April 7 trading on U.S. stock exchanges ended near intraday highs. S&P 500 rose by insignificant 0.08%, Nasdaq 100 rose by symbolic 0.04%, Dow Jones added 0.18%, Russell 2000 - 0.17%.

Buyers were supported by news of a possible de-escalation of the U.S. conflict with Iran ahead of the deadline at 8:00 p.m. ET. Donald Trump's rhetoric towards Iran noticeably toughened, while US and Israeli military strikes on Iranian territory continued in parallel. By the end of the trade, however, there were numerous reports of ongoing diplomatic contacts involving Pakistan as a mediator.y

Within the Magnificent Seven, Alphabet (GOOGL: +1.82%) was the top performer, while Apple (AAPL: -2.07%) and Tesla (TSLA: -1.75%) were under pressure. The energy sector (XLE: +0.8%) emerged as the broad market's top gainer as WTI crude oil reached new highs since 2022. Suppliers of consumer staples (XLP: -1.69%) were the outsiders.

Total durable goods orders fell 1.4% m/m in February, weaker than expected, with the figure excluding transportation rising 0.8% and core capital goods orders rising 0.6%, beating consensus.

The continued stability of the economy was signaled by ADP data, which showed the highest rate of growth of employment in the private sector since the beginning of the year. At the same time, the March survey of the FRB of New York recorded a strengthening of inflation expectations at the horizon of one year and three years. This poses a difficult choice for the Fed between the need to contain inflation and prevent the economy from slowing down.

- Universal Music Group (UNVGY: +13.9%) has received an offer from Pershing Square billionaire Bill Ackman to buy it for about $64 billion, payable in stock and cash, which implies a premium of about 78% to the previous close.

- Paramount Skydance (PSKY: +10.7%) has raised about $24 billion in loans from three Middle Eastern sovereign wealth funds to finance its deal with Warner Bros. Discovery.

- Several top executives are leaving The Trade Desk (TTD: -6.8%), including marketing director Ian Colley and board member Lisa Beyer.

- Apple (AAPL: -2.1%) has encountered problems at the stage of engineering tests of the foldable iPhone, wrote Nikkei Asia. In this regard, the start of mass production of this device may be delayed, although Bloomberg sources indicate that the basic schedule will be maintained.

- Artivion (AORT: +5.3%) received FDA approval for the NEXUS Aortic Arch System, an aortic arch device designed for use in complex vascular pathologies.

This article was AI-translated and verified by a human editor