Stocks Steady as Iran Impasse Lifts Oil and Yields: Markets Wrap
(Bloomberg) — Stocks withstood rising oil prices and higher bond yields after the US and Iran failed to agree on terms to end the war in the Middle East.
Europe’s Stoxx 600 wavered while S&P 500 futures traded just below an all-time high. Brent climbed more than 2% to above $103 a barrel as the Strait of Hormuz remained shut. Optimism that the US and Iran could reach a deal to reopen the waterway was dashed after President Donald Trump said Tehran’s latest proposals were “totally unacceptable.”
Bond yields rose across the world as the continued standoff amplified fears of an oil-driven inflation shock, stoking expectations that central banks will need to tighten monetary policy. The dollar was little changed, while gold dipped below $4,700 an ounce.
Global equities are trading at record highs after a stunning tech-led rally that’s been driven by strong earnings and resurgent optimism around artificial intelligence, even as the war continues. Investors will be watching Trump’s visit to China’s President Xi Jinping later this week to see whether they can influence the situation surrounding the conflict.
“Markets appear willing to look through the rhetoric ahead of the Trump-Xi meeting,” said Laura Cooper, global investment strategist and head of macro credit at Nuveen. “Optimism around a near-term Strait of Hormuz reopening poses the greatest near-term risk to the rally. Markets could soon recalibrate to the risk of more persistent energy-driven pressures.”
Technology stocks led gains in Asia after US semiconductor shares rallied more than 5% on Friday. South Korea’s Kospi index advanced 4.3% to notch a fifth successive record high.
Starmer Worries
UK gilts underperformed as Prime Minister Keir Starmer battled to save his premiership after Labour’s sweeping defeat in last week’s local elections. Punters on the Polymarket prediction platform added to bets that Starmer would be forced to leave, giving a 65% chance of the premier exiting by Dec. 31.
The yield on 10-year gilts rose four basis points to 4.95%. The pound fell 0.1% against the dollar
“Our base case currently is one of managed exit, where Starmer would set a timeline for another person to take over before the next elections,” wrote Jefferies strategist Mohit Kumar. “We have had a negative view on the UK long end and the currency and are not changing our view.”
Corporate News:
Alphabet Inc. is planning to issue yen bonds for the first time in a move that may help fund investments as artificial intelligence competition intensifies. Prosus NV is selling a 5% stake in Delivery Hero SE to Aspex Management, according to an e-mailed statement on Monday. Japan’s JX Advanced Metals Corp. plans to sell ¥250 billion ($1.6 billion) of convertible bonds, the Nikkei newspaper reported. Some of the main moves in markets:
Stocks
The Stoxx Europe 600 was little changed as of 9:28 a.m. London time S&P 500 futures were little changed Nasdaq 100 futures fell 0.2% Futures on the Dow Jones Industrial Average were little changed The MSCI Asia Pacific Index rose 0.5% The MSCI Emerging Markets Index rose 0.9% Currencies
The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1780 The Japanese yen fell 0.2% to 157.04 per dollar The offshore yuan was little changed at 6.7932 per dollar The British pound fell 0.1% to $1.3612 Cryptocurrencies
Bitcoin was little changed at $80,686.03 Ether was little changed at $2,329.68 Bonds
The yield on 10-year Treasuries advanced three basis points to 4.38% Germany’s 10-year yield advanced one basis point to 3.02% Britain’s 10-year yield advanced four basis points to 4.95% Commodities
Brent crude rose 2.4% to $103.69 a barrel Spot gold fell 0.9% to $4,675.12 an ounce This story was produced with the assistance of Bloomberg Automation.
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