Stock Selloff Eases as Futures Rise, Bonds Fall: Markets Wrap
(Bloomberg) — The biggest monthly selloff in global stocks since 2022 moderated after the US gave Iran more time to reach a deal on ending the month-long war. Bonds extended losses on inflation woes.
US equity-index futures rose 0.5% after President Donald Trump delayed his deadline for Iran to agree to a ceasefire by 10 days. European shares were set to open 0.5% higher, while Asian equities pared earlier losses to drop 0.4%. The recovery came after Wall Street gauges fell to their lowest level since September on Thursday.
The MSCI All Country World Index is still headed for its worst month in more than three years as the Middle East conflict stokes concerns about quicker inflation and lower economic growth. Australian and New Zealand bonds slid, following similar moves in Treasuries in the US session. The selloff was worse in Japan with super-long bonds leading declines. European bond futures also fell.
Hurting the sentiment was Brent crude staying at elevated levels. The commodity fell as much as 2.7% to about $105 a barrel on the deadline extension, before paring those losses to trade around $108.
The latest bout of whipsaw trading extends a month of war-driven swings, with investors uncertain about whether hostilities are set to ease or escalate. Traders are closely watching the Strait of Hormuz, a key waterway for Middle East oil flows that remains effectively shut, driving crude oil higher and adding to inflation pressures.
“By extending the deadline, it effectively kicks the can down the road, pushing back any concrete resolution regarding the reopening of the Strait of Hormuz,” Tony Sycamore, a market analyst at IG Australia, wrote in a note. “This, in turn, simply extends the uncertainty weighing on markets and the broader global economy.”
Trump said talks with Iran were going “very well.” He also said he would extend his pledge to refrain from attacks on the country’s energy sites, offering a brief calm to global energy markets jolted by the conflict.
Tehran has a string of conditions for ending the conflict, one of which is a guarantee that the US and Israel won’t resume their attacks.
The markets were caught off guard by the initial US and Israeli strikes at the end of February, which came in the middle of talks that were ostensibly going well, but were accompanied by a huge US military buildup in the Middle East, Kyle Rodda at Capital.com wrote in a note.
“The current situation looks very similar, with markets positioning for a potential weekend escalation,” he said.
What Bloomberg’s Strategists Say…
“Equities are likely to extend their slide into the weekend with the status quo of the US-Iran war showing no sign of shifting despite hopeful comments from the US about a path toward peace. Investors face serious difficulties in trying to judge the potential for a turnaround.”
— Garfield Reynolds, MLIV Asia Team Leader. Click here for the full analysis.
Markets have whipsawed since the conflict started at the end of February. Asia’s benchmark share index has dropped 10% this month, while gold slumped about 15%. Brent crude has jumped about 48%, a record monthly gain, according to data compiled by Bloomberg.
In other corners of the market, the yen strengthened against the dollar after Japanese Finance Minister Satsuki Katayama said the authorities can take measures against foreign-exchange moves, including bold actions. Bitcoin traded below $69,000. The dollar fell and gold jumped.
Sentiment remained fragile as traders monitored conflicting news about de-escalation and also attacks. The Wall Street Journal reported the Pentagon is looking at sending up to 10,000 additional ground troops to the Middle East. Israel said it struck ballistic missiles production sites across Iran.
Meanwhile, Treasury Secretary Scott Bessent said a US insurance program meant to boost shipping through the Strait of Hormuz will begin soon, a move that may help revive flows of much of the world’s oil and gas supplies. The near-total closure of the waterway has meant millions of barrels of lost daily oil output, while pushing up product prices from diesel to jet fuel.
The United Arab Emirates told allies that it would participate in a multinational maritime task force intended to reopen the Strait of Hormuz, as it lobbies to form a coalition to ensure shipping is able to pass through the vital Gulf waterway, the Financial Times reported.
“The war in Iran and the resulting surge in oil prices continue to dampen risk appetite,” said Adam Turnquist at LPL Financial. “Any sustainable market recovery will require meaningful progress toward a peace agreement and a reopening of the Strait of Hormuz.”
Corporate News:
Pernod Ricard SA and Brown-Forman Corp., the owner of Jack Daniel’s whiskey, are discussing a merger as the alcoholic drink companies look at ways to consolidate amid an industry downturn. Meituan expects losses per delivery order to start narrowing in the current quarter, as Chinese officials rein in its intense competition with Alibaba Group Holding Ltd. and JD.com Inc. Apple Inc. plans to open Siri to outside artificial intelligence assistants, a major move aimed at bolstering the iPhone as an AI platform. Some of the main moves in markets:
Stocks
S&P 500 futures rose 0.5% as of 6:48 a.m. London time Nasdaq 100 futures rose 0.5% The MSCI Asia Pacific Index fell 0.4% Hong Kong’s Hang Seng rose 0.6% The Shanghai Composite rose 0.6% Euro Stoxx 50 futures rose 0.4% Currencies
The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1536 The Japanese yen was little changed at 159.70 per dollar The offshore yuan was little changed at 6.9183 per dollar The British pound was little changed at $1.3336 Cryptocurrencies
Bitcoin fell 0.5% to $68,643.31 Ether fell 0.1% to $2,061.62 Bonds
The yield on 10-year Treasuries advanced two basis points to 4.43% Japan’s 10-year yield advanced 10 basis points to 2.375% Australia’s 10-year yield advanced nine basis points to 5.10% Commodities
Spot gold rose 2% to $4,461.69 an ounce West Texas Intermediate crude fell 0.4% to $94.14 a barrel This story was produced with the assistance of Bloomberg Automation.
–With assistance from Sarah Chen.
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