Stocks, Bonds Fall as Oil Jumps After Hormuz Chaos: Markets Wrap
(Bloomberg) — Oil jumped, driving US stocks and Treasuries lower after a turbulent weekend in the Middle East cast doubt on the prospects for peace talks ahead of a looming ceasefire deadline.
Brent rose 4.6% toward $95 a barrel as the US Navy carried out its first seizure of an Iranian vessel in the Strait of Hormuz. Iran had earlier halted traffic through the waterway less than 24 hours after saying ships could pass.
Futures for the S&P 500 fell 0.4% after the benchmark notched a succession of record highs. European stocks slid 1%. Bond yields rose sharply in Europe, whereas the moves in Treasuries were more modest. Gold dropped below $4,800 an ounce, while the dollar edged higher.
Monday’s risk-off moves are denting a rally that had erased all of the war-driven losses in US stocks. President Donald Trump and Iranian officials offered disparate views on the next stage of the war, leaving it unclear whether the sides would meet for talks on Tuesday, with a truce set to expire shortly.
Traders believe pressure on both parties to reach a deal remains high, even as volatility during negotiations is likely to be elevated. Iran’s state-run news agency cited President Masoud Pezeshkian as saying the war was in no one’s interest and that diplomatic avenues should be used to lower tensions.
“While the developments from the weekend certainly cooled the optimism, it did not derail it completely,” said Stephan Kemper, chief investment strategist at BNP Paribas Wealth Management. “Markets keep expecting a near-term solution which will allow energy to flow again.”
Technology stocks took a breather on Monday after the sector drove much of the rebound in US equities, with the Magnificent Seven up 20% since the US benchmark hit its 2026 bottom on March 30. Meta Platforms Inc., Nvidia Corp. and Amazon.com Inc. fell more than 1% in premarket trading.
While the situation in the Middle East remains in flux, traders will also focus on Kevin Warsh’s Senate confirmation hearing this week to lead the Federal Reserve. The US two-year yield is once again below the central bank’s 3.75% ceiling after trading above the level for much of the war due to the surge in oil.
Any indication from Warsh that he would be inclined to push for monetary easing this year and look through a war-driven energy shock could further boost short-dated Treasuries. Money markets are pricing around a 50% chance of a rate cut by December.
The earnings season, meanwhile, has been off to a strong start. S&P 500 companies that have disclosed their results so far have seen their profits come in 11% above expectations, on aggregate, data compiled by Bloomberg Intelligence showed.
Major companies releasing earnings this week include Tesla Inc. and Boeing Co. on Wednesday, followed by Intel Corp. the following day. The economic impact of seven weeks of war in the Middle East will also begin to emerge this week when purchasing manager indexes are published Thursday.
“Earnings season is supportive and does matter, but the dominant driver is geopolitics. Once a deal is reached, attention will shift back to earnings,” said Patrik Lang, chief investment strategist at Global Gate Asset Management. “The strength may be somewhat concentrated, as much of the growth continues to come from the Magnificent Seven.”
Corporate News:
UniCredit SpA said Commerzbank AG needs deep changes as the Italian lender’s chief executive officer, Andrea Orcel, steps up his push to acquire the German rival. QXO Inc. said it’s acquiring insulation company TopBuild Corp. for about $17 billion, making QXO the second-largest publicly traded building products distributor in North America. Blue Origin’s flagship New Glenn rocket launched to space on its third flight, reusing a booster for the first time but failing to correctly place the satellite it was carrying into its intended orbit. AST SpaceMobile Inc., which built the satellite, fell 13% in premarket trading. Revolut Ltd. Chief Executive Officer Nik Storonsky said he wants to take the London-based digital bank public, but not until at least 2028. Some of the main moves in markets:
Stocks
S&P 500 futures fell 0.5% as of 6:26 a.m. New York time Nasdaq 100 futures fell 0.4% Futures on the Dow Jones Industrial Average fell 0.5% The Stoxx Europe 600 fell 1% The MSCI World Index fell 0.3% Currencies
The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1764 The British pound was little changed at $1.3512 The Japanese yen fell 0.2% to 158.91 per dollar Cryptocurrencies
Bitcoin rose 0.9% to $75,335.42 Ether rose 1.5% to $2,316.26 Bonds
The yield on 10-year Treasuries advanced one basis point to 4.26% Germany’s 10-year yield advanced three basis points to 2.99% Britain’s 10-year yield advanced five basis points to 4.81% Commodities
West Texas Intermediate crude rose 5.5% to $88.45 a barrel Spot gold fell 0.7% to $4,797.48 an ounce This story was produced with the assistance of Bloomberg Automation.
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