WS #5281

The primary signal is a significant de-escalation in the Strait of Hormuz crisis, directly countering the previous escalation narrative. Iran has announced the strait is open to commercial shipping, corroborated by Al Jazeera and Iranian media, with traders noting ships are moving through. This has triggered an immediate 10% drop in oil prices, reversing the earlier 8% spike and alleviating inflationary pressures that could support a broad market rally. However, cross-source skepticism remains: shipping firms seek clarifications, some ships have turned back, and analysts like Rapidan Energy's Bob McNally warn the strait could close again without a US-Iran deal. Fed Governor Waller acknowledges a 'reasonable probability' of quick reopening but cautions on inflation risks from the energy shock, suggesting monetary policy remains data-dependent. Geopolitical tensions persist with Trump claiming Iran 'agreed to everything' and Iranian threats against Israel, but the immediate oil supply shock has dissipated. In corporate news, Merck shares are higher on EU approval for ENFLONSIA, and biotech firms Evaxion and Immatics present positive clinical data at AACR, though these are sector-specific signals. The overall market narrative shifts from oil-driven inflation fear to cautious optimism, though volatility remains high.