April 17 – The stock market has given up morning gains, as the major indexes now trade squarely in the red at the time of writing. Earnings results have been mixed thus far, with some positivity emerging but negativity in chip stocks weighing on the market due to caution growing following weaker than expected Q1 sales from ASML Holding. The VIX has climbed from its morning lows to push near 18.8 at the time of writing. The dollar is now slightly in the red on the day, trading just above 106, as it loses steam after closing at a fresh five-and-a-half-month high yesterday. Treasuries are slightly lower on the day as well, with 10-year yields hovering around 4.60% and 2-year yields just above 4.92%. Crude oil is sharply lower at mid-day following this morning’s DOE report, outlined in more detail below, as the nearby WTI contract hovers above the $83 mark, its lowest level since the start of the month. The ags are mostly lower on the day, save for the soy complex, amid limited fresh fundamental news.
The Biden administration is seeking an increase in tariffs on imports of Chinese steel and aluminum, according to reports from multiple outlets this morning, with the president reportedly set to make the announcement during a visit to the United Steelworkers Union in Pittsburg today. The time and place of this decision is no coincidence, with Pennsylvania set to be a key battleground state in November’s presidential election, highlighting the added potential for market shake-ups during an election year. Chinese steel and aluminum are already subject to a Trump-era 7.5% tariff, and the reported goal is to more than triple those rates to 25%. This move will likely draw a response from China, who vehemently opposed the initial tariffs and expressed concern over additional measures during U.S. Treasury Secretary Janet Yellen’s recent trip to China. Relations between the U.S. and China have improved considerably in recent months from their icy depths of recent years, but it’s clear that economic competition will keep tensions present for the foreseeable future.
British Foreign Minister David Cameron said this morning “it’s clear the Israelis are making a decision to act” in response to Iran’s weekend missile attack, following his meeting with top officials in Israel. The Iranian strikes were largely unsuccessful thanks to Israel’s air defenses and help from allies, including the U.K. and U.S., and brought hope that escalations toward a more direct conflict between Israel and Iran could come to an end. Allies have urged restraint from Israel to avoid a widening conflict, and Israeli Prime Minister Benjamin Netanyahu has thanked them but also stated that Israel would make their own decisions. Iranian officials have responded to these headlines with harsh rhetoric of their own, keeping geopolitical risks present. Crude oil prices initially rose on the back of the news, but have since fallen lower, while markets will now await the response.
U.S. crude oil stocks rose to a 10-month high on the back of a stronger than expected 2.74 Mb build in the week ending 4/12, according to this morning’s DOE report. This was the fourth consecutive weekly build in U.S. crude stocks and has been the trend in recent months, helping keep crude oil prices in the red on the day despite the resurgence of Middle East tensions. U.S. crude oil exports rebounded to a four-week high at 4.726 Mb, climbing nearly 75% from the week prior’s shockingly low level, with this year’s exports continuing to outpace last year with supply from OPEC+ remaining restricted. Conversely, gasoline and distillates both saw much sharper than expected draws on the week, with their stocks down 1.15 Mb and 2.76 Mb, respectively, on softer domestic production and imports.
