U.S. Stock Outlook | The three major stock index futures decline in the short term, reports suggest Iran refuses to reach any temporary ceasefire agreement with the United States

Pre-market Market Developments

1. On April 7 (Tuesday), ahead of the U.S. market open, as of the time of this release, Dow Jones futures were down 0.43%, S&P 500 index futures were down 0.48%, and Nasdaq 100 futures were down 0.64%.

2. As of the time of this release, Germany’s DAX index was down 0.29%, the UK’s FTSE 100 index was down 0.11%, France’s CAC 40 index was up 0.21%, and Europe’s STOXX 50 index was down 0.41%.

3. As of the time of this release, WTI crude oil was up 2.76%, at $115.51 per barrel. Brent crude oil was up 0.95%, at $110.81 per barrel.

Iran reportedly refuses to agree to any temporary ceasefire deal with the U.S., and reports of explosions were heard after the attack on Khark Island. A source said Iran had rejected any temporary ceasefire agreement with the United States. Iran has set preconditions for talks with the U.S. on a “lasting peace.” The preconditions include an immediate cessation of attacks, assurances that no further attacks will occur, and compensation for losses. Under a permanent peace agreement, Iran and the parties seeking to charge fees for ships transiting the Strait of Hormuz—those fees would vary based on the type of vessel, the cargo carried, and current transit conditions. It is reported that after the U.S. launched attacks, explosions were heard on Khark Island, and the report did not specify what target had been struck on the island. On Monday, Trump said any agreement to resolve the conflict must ensure freedom of navigation through the strategic chokepoint, the Strait of Hormuz; if Iran fails to reach a deal by 8:00 p.m. Eastern Time on Tuesday, the U.S. will destroy Iran’s infrastructure, including power plants and bridges.

Another “TACO moment” is coming?
Trump’s ultimatum turns into a “run away like in the boy who cried wolf” reality show, and the market is betting on a “stand-off retreat” plot. The latest “deadline” / “ultimatum” Trump has demanded of Iran—there are only a few hours left—yet financial market institutions and retail investors have again found themselves being forced to get ready in advance for a range of possible outcomes under a dual squeeze: bullish market calls that have grown ever louder as “another TACO moment is approaching,” along with economists’ pessimistic narrative about “stagflation” versus “recession.” But whether they are increasing holdings of stocks and bond assets, adding to commodities exposure, or holding cash for a full risk-avoidance strategy, they largely share a common view—that market volatility over the past few weeks, triggered by Trump’s constantly shifting stance, has left them frustrated and uncertain about the path of future pricing.

IEA issues its harshest warning: A Hormuz blockade triggers the “strongest energy tsunami in history,” with an impact far beyond the combined total of the previous three crises. In an interview, International Energy Agency (IEA) Executive Director Fatih Birol said the current oil and natural gas crisis caused by a blockade of the Strait of Hormuz is “even more severe than the sum of the crises in 1973, 1979, and 2022.” In a special interview published Tuesday, he said, “The world has never experienced an energy supply disruption of this scale.” He said European countries and countries such as Japan and Australia would be hit, but the greatest risk is for developing countries, which would face the predicament of rising oil and gas prices, soaring food prices, and a broad acceleration of inflation. Birol said IEA member countries agreed last month to release some strategic reserves. Part of that has already been released, and the process is still ongoing.

JPMorgan throws out the most hawkish Wall Street forecast: No Fed rate cuts in 2026, and a further 25 basis-point hike in 2027. Morgan Stanley? (No) JPMorgan’s Chief U.S. Economist Michael Feroli forecasts that the Fed will not cut rates for all of 2026; the next policy adjustment would be a 25 basis-point rate hike in the third quarter of 2027. This would push the upper limit of the federal funds rate to 4.00%, from the current range of 3.50% to 3.75%. This forecast creates a clear divergence between JPMorgan and both the Fed’s own rate outlook and most Wall Street institutions’ views. And as the Iran conflict continues to push up energy prices and stubborn inflation proves difficult to bring down, there are no signs that this divergence will narrow.

Trump’s ultimatum rattles markets: Risk-off sentiment drags crypto down, and Bitcoin loses the $70k level. On Tuesday, Bitcoin’s price slid. Before the U.S. President Donald Trump’s deadline to Iran arrived, cryptocurrencies were swept into broader market volatility. The biggest cryptocurrency’s decline at one point reached 2.2%; as of the time of this release, its trading price was around $68,435.59. This drop erased the gain from the previous day, when Bitcoin had briefly broken above $70,000 for the first time since March. Other digital assets also fell, with Ether, the second-largest token, down as much as 2.8%. Global stock markets moved amid volatility ahead of Tuesday’s deadline set by Trump. Trump threatened to bomb Iran’s civilian infrastructure unless the Strait of Hormuz is opened.

Medicare reimbursement gets upgraded unexpectedly!
The 2027 “rate cut” bonus triggers a surge in U.S. healthcare insurance stocks. Insurers’ stock prices collectively rose in pre-market trading in the U.S. on Tuesday, after the U.S. government said it plans to raise the payment rate for the 2027 U.S. Medicare Advantage program by far more than the market had expected. In pre-market trading in the U.S. on Tuesday, UnitedHealth (UNH.US) jumped 5.96%, while healthcare insurers including CVS Health (CVS.US), Elevance Health (ELV.US), Centene (CNC.US), and Molina Healthcare (MOH.US) rose between 3% and 6%. In addition, Humana (HUM.US), which has long focused on the federal Medicare business, saw its pre-market stock price surge more than 9% and became the best-performing stock in the S&P 500 in pre-market trading.

Switzerland plans to refine capital rules for UBS (UBS.US), which may influence the bank’s future and even its headquarters location. Reports say Switzerland is expected to further refine stricter capital rules targeting UBS this month. This step is seen as key in determining the future direction of this banking giant, and it could even affect whether it chooses to keep its headquarters in Switzerland. Since Credit Suisse’s collapse in 2023 and UBS’s acquisition driven behind the scenes by the government, Switzerland has pledged to strengthen regulation of the remaining home-country global bank. UBS said this could force it to add an additional $22 billion in capital. According to lawmakers and banking figures, in the legal draft expected to be released in April, the Swiss government is very likely to stick to its core requirement—that UBS must support its overseas business in full with Common Equity Tier 1 capital (CET1). UBS believes this requirement is too stringent. The government insists that, given UBS’s balance sheet size is about twice the size of Switzerland’s total economy, the capital rules reform is necessary to maintain financial stability.

Meta (META.US) reportedly plans to open-source its next-generation AI model. Reports say Meta is preparing to roll out the first batch of new artificial intelligence (AI) models developed under the leadership of Alexandr Wang, and plans to ultimately provide multiple versions of these models in the form of an open-source license. Sources say before Meta officially releases the new models, it plans to retain some proprietary technology and ensure these models do not create new security risks. In June last year, Meta announced a $14.3 billion investment in AI startup Scale AI and received a 49% stake. As part of the investment, Scale AI co-founder and CEO Alexandr Wang will join Meta to lead its “superintelligence” team focused on general artificial intelligence (AGI).

Apple (AAPL.US) reportedly faces engineering setbacks with its first foldable iPhone, and mass production and shipments may be delayed by months. Sources say Apple encountered setbacks during engineering testing for its first foldable iPhone, which could lead to delays in its large-scale production and product shipment plans. According to media reports, engineering development issues may cause the first shipments of the foldable iPhone to be delayed by several months at worst. The reports cite an informed source as saying, “The early test production phase really had more issues than expected, and it needs more time to resolve these issues and make the necessary adjustments.” Media previously reported in January that Apple would focus on launching its first foldable iPhone and two non-foldable models with upgraded cameras and a larger screen, with a flagship release planned for the second half of 2026.

Intel (INTC.US) reportedly is in talks with Amazon (AMZN.US) and Google (GOOGL.US) on cooperation involving advanced packaging services. Intel has been holding ongoing discussions with at least two large customers, including Amazon and Google, and the cooperation involves its advanced packaging services. The reports say Intel’s ambitions in advanced packaging depend largely on whether it can secure these external technology giants as customers. A former Intel employee familiar with the company’s packaging business told the media that Intel’s EMIB and EMIB-T technologies are designed to deliver a more “surgical-precision” approach to chip packaging than TSMC’s (TSM.US) solutions. The reports say this approach is expected to be more energy-efficient, save space, and ideally help customers reduce costs over the long term. According to the reports, Intel said EMIB-T will be used in its wafer fabs this year.

Key Economic Data and Event Schedule

20:30 Beijing time: Preliminary U.S. February Durable Goods Orders, month-over-month.

20:55 Beijing time: U.S. Redbook retail sales year-over-year for the week ending March 30.

22:10 Beijing time: U.S. April IBD Consumer Confidence Index.

23:00 Beijing time: U.S. March New York Fed 1-year inflation expectations.

00:00 Beijing time next day: U.S. April EIA monthly report—forecast for the Brent crude oil price for the current year.

04:30 Beijing time next day: U.S. weekly change in API crude oil inventories for the week ending April 3.

00:00 Beijing time next day: EIA releases its Monthly Short-Term Energy Outlook report.

00:35 Beijing time next day: Speech by 2027 FOMC voting member and Chicago Fed President Goolsbee on monetary policy.

05:50 Beijing time next day: Speech by Fed Vice Chair Jefferson on the economic outlook and the labor market.

Pre-market on Wednesday: Delta Air Lines (DAL.US)