WS #5461

The dominant market signal remains the escalating Strait of Hormuz crisis, with new developments intensifying supply disruption fears and triggering a sharp risk-off reversal in equity futures. The U.S. seizure of an Iranian vessel, reported by CNBC and corroborated by Bloomberg and Reuters, has driven oil prices to surge nearly 8% (WTI above $90, Brent approaching $97), directly contradicting earlier Iranian claims of reopening the strait. This escalation is further highlighted by an Axios report via jetstream indicating senior Iranian officials believe the U.S. and Israel may be preparing a surprise attack before the ceasefire expires Tuesday, raising the specter of a broader regional conflict. The oil shock is spilling into equity markets, with Reuters noting S&P 500 futures down 1% as higher oil revives inflation and risk-off concerns, and Zonebourse reporting S&P 500 futures down 0.9% and Nasdaq 100 down nearly 1% in early trading. A significant counter-signal emerges from Canada, where Nova Scotia businesses report the federal fuel tax cut is providing relief from soaring diesel costs, which could dampen inflationary pressures and consumer bearishness from the oil spike. Additionally, National Australia Bank has added $215 million in credit provisions due to the Iran conflict's potential impact, signaling broader financial sector stress. The geopolitical narrative is escalating, with no de-escalation signals in this window.