Before the bell: oil markets cool down

A ceasefire boosts hopes for a return to calm in the Middle East. Over the past 24 hours, oil prices have dropped by around 10%.

Eight dollars and fifty cents per barrel, or a decline of more than 10%—that’s how much the price of a barrel of WTI crude has fallen in the past 24 hours. Oil is now trading below the level it reached before Israel’s airstrikes on Iran began. After Iran launched an attack on a US military base in Qatar, the United States announced a temporary ceasefire between Iran and Israel, aimed at restoring peace in the region. The S&P 500 gained 1%, although today remains uncertain as both sides have reportedly carried out new attacks despite the ceasefire. In Asia, the MSCI Asia Pacific Index rose 2%, with 80% of stocks in the green.

With tensions in the Middle East seemingly easing—at least for now—investors may once again shift their focus to broader economic data. Today brings data from S&P/Case-Shiller on the health of the US housing market. Melexis received a buy recommendation this morning from Morgan Stanley, with a raised price target from 60 euro to 80 euro per share. Meanwhile, The Walt Disney Company is set to cut its dividend, while Carnival, FedEx, and BlackBerry are also expected to report earnings.

Investing in defense

Traders will closely follow the two-day NATO summit starting today in The Hague. The key question for investors is how much funding European governments will channel into the European defense industry in the coming years. Notably, the STOXX Europe Aerospace & Defense ETF has already risen 65% this year as Europe steps up its focus on the war in Ukraine. Whether that war ends tomorrow or not, it’s likely that Germany’s Rheinmetall is assured of a full order book for years to come. The company currently has 55 billion euro in orders for tanks and weapons, with projections that this could grow to 300 billion euro by decade’s end, according to the CEO. The share price of Rolls-Royce Holdings may also react to news from the summit, as 17% of its revenue comes from defense. The same goes for France’s Thales and Italy’s Leonardo.

CF Industries: Investor Day

If you invest in individual stocks, it’s important not only to analyze your own holdings but also their industry peers. Today offers that opportunity to shareholders of Tessenderlo, as CF Industries holds its Investor Day in New York. The fertilizer producer, with a market capitalization of 15.6 billion euro, will present its future investment plans, outlook for the sector, and growth expectations. Tessenderlo’s stock came under pressure in 2023 due to its Tessenderlo Kerley division, which focuses on fertilizer production and sales. That unit saw declining revenue last year, partly due to lower volumes and falling fertilizer prices. Will things turn around? CF Industries’ Investor Day, starting at 15:30 CET, could offer clues. Though the two companies differ in specialties and product lines, both are active in the agricultural chemicals market—meaning sector trends revealed by CF may also be relevant for Tessenderlo. You can follow the event via this link.

Did you know…

that two out of every ten barrels of oil produced globally come from the United States? Russia and Saudi Arabia each account for one in ten barrels of global oil production.