Michael P. Reinking, CFA
Sr. Market Strategist

Well, if you just looked at the headline trading in futures markets at the moment you probably wouldn’t guess that there was an Israeli air strike in Iran overnight. Similar to the situation heading into last weekend the response seemed well telegraphed and left minimal damage and casualties. Press is suggesting that the tit-for-tat response was designed to de-escalate the situation and commentary from Iranian sources have suggested there is no immediate plan for retaliation. On the headlines overnight there were sharp moves across futures markets with the typical conflict related trading across equities, oil and into other safe haven assets like Treasuries, the USD and gold. However, the bulk of all of those moves have already unwound. As we approach the open S&P futures are trading only slightly lower nearly 2% off the overnight low. That overnight move filled the gap from late February post Nvidia earnings. The S&P 500 had closed lower for 5 consecutive sessions coming into today and was set up to end lower for the third consecutive week. Obviously, we would have preferred the selloff to happen within regular trading hours as equities had started to get short-term oversold and would have provided an easier opportunity for a bounce. This setup is much more difficult to navigate. Adding to that complexity today is options expiration which will add to volumes and potentially volatility around the open and the close.