Oil Climbs, US Futures Dip on Tense US-Iran Talks: Markets Wrap
(Bloomberg) — US stock futures fell and oil climbed on Monday as talks between Washington and Tehran over a peace deal were clouded by a renewed threat from President Donald Trump to strike Iran.
S&P 500 contracts slipped 0.6% in early Asia trading after US markets were closed Friday for a holiday. Brent crude rose more than 1%, trading around $81.50 a barrel. The dollar edged up against most major peers, with the pound slipping on speculation around Keir Starmer’s future as UK prime minister.
Trump once again threatened strikes if Hezbollah keeps attacking Israel. Things got off to a confusing start Sunday when Iranian media reported that Iran halted talks over Trump’s latest comments, but people familiar with the matter said the discussions aimed at settling the issue of the Islamic Republic’s nuclear program and permanently reopen the Strait of Hormuz were continuing.
The developments are another test of the optimism that’s seen a tech-led rally in stocks gain further momentum after the US and Iran agreed to an interim peace deal. A gauge of global equities has risen 15% so far this quarter despite the war, on track for its biggest quarterly jump in six years.
“A potential unraveling of the US-Iran Memorandum of Understanding, which remains incredibly fragile given the events over the weekend” is one of the biggest risks to stock gains, Tony Sycamore, an analyst at IG in Sydney, wrote in a note to clients.
Traders in Asia Monday will be focused on China’s commercial bank lending rates as the economy shows signs of stalling. The loan prime rates are likely to remain unchanged, as buffers from strong exports and the AI boom may reduce the urgency to step up support for the economy, according to Bloomberg Economics.
Meantime, the pound slid toward a fresh low for the year as Starmer is expected to set out a timetable for his departure as PM in the coming days, and may concede power as soon as Monday, people familiar with the matter said, though they cautioned that was not certain. Starmer spent the last three days considering his position and whether he should continue to fight attempts by Greater Manchester Mayor Andy Burnham, who was elected to Parliament last week, to depose him.
The question for investors is the impact on UK’s finances if Burnham becomes prime minister. He has so far offered little clarity on the potential policies he’d pursue, making it difficult to gauge the ramifications for future borrowing. Markets are nervous about any potential to ramp up bond sales to fund spending, given the UK is already struggling with its debt pile.
“Markets will be focused on Burnham’s views on fiscal policy and whether there will be any relaxation of the current fiscal rules,” Commonwealth Bank of Australia strategists including Kristina Clifton wrote in a note to clients. “A loosening in fiscal rules would likely be poorly received by the UK bond market and weigh on GBP/USD.”
Some of the main moves in markets:
Stocks
S&P 500 futures fell 0.6% as of 8:13 a.m. Tokyo time Hang Seng futures were unchanged S&P/ASX 200 futures fell 0.2% Currencies
The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1465 The Japanese yen was little changed at 161.45 per dollar The offshore yuan was little changed at 6.7835 per dollar The Australian dollar was little changed at $0.7005 Cryptocurrencies
Bitcoin fell 0.1% to $63,683.91 Ether fell 0.5% to $1,711.26 Bonds
Australia’s 10-year yield advanced two basis points to 4.83% Commodities
West Texas Intermediate crude rose 2.3% to $77.60 a barrel Spot gold rose 0.1% to $4,160.14 an ounce This story was produced with the assistance of Bloomberg Automation.
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