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U.S. equity futures surged to pre-market highs following revised GDP data showing Q4 growth halved to 0.7% and in-line PCE inflation figures. The Atlanta Fed's previously inflated growth projections (up to +5%) were heavily criticized, with the White House's reliance on this flawed metric—skewed by the government shutdown—now under scrutiny. Geopolitical tensions over the Strait of Hormuz remain central to market sentiment, with conflicting reports on Iran's leadership and potential diplomatic breakthroughs. S&P 500 futures rose 0.5% as traders balance economic data with war-related volatility. The market's focus on geopolitical risks overshadows economic fundamentals for now, but a resolution in the Hormuz standoff could shift attention back to monetary policy. A rate cut narrative is gaining traction due to weaker growth data, though uncertainty persists over the timeline for a military or diplomatic resolution. Traders are advised to monitor weekend developments and Trump's accelerated 4-5 week timeline for potential breakthroughs. For U.S. equity investors, the interplay between geopolitical risks and economic data will drive volatility. The drop in WTI crude (-$3.44 to $92.25) highlights energy market sensitivity to regional tensions. MENA investors should watch how Hormuz developments impact oil prices and regional trade routes, while also assessing the Federal Reserve's response to revised growth figures.
