Oil jumps, stocks retreat as Mideast ceasefire teeters
Oil prices rose and global stocks eased as markets grew on concerns that the ceasefire between the United States and Iran might not survive and tensions over the Strait of Hormuz rose.
Brent crude futures rose nearly 6.0 percent to $95.85 per barrel on Monday.
MSCI’s world share index last fell around 0.3 percent, while Europe’s cross-regional STOXX 600 index fell 1.1 percent after Asia’s stock markets shrugged off risks to the rise.
S&P 500 futures fell 0.65 percent.
On Monday, concerns grew that the ceasefire between the United States and Iran could not continue after the United States announced that it had seized an Iranian cargo ship trying to bypass the blockade and Iran vowed to retaliate.
While the United States maintained its blockade of Iranian ports, Iran lifted and then reimposed its own blockade of maritime traffic passing through the Strait of Hormuz.
However, Kpler data showed that more than 20 ships carrying petroleum products, metal, gas and fertilizer passed through the strait on Saturday, the strait’s busiest day since March 1.
“Markets are trying to hang on to any news that might point to one outcome or another, which is why there are these big swings. But it’s still a very uncertain and volatile situation,” Investec economist Sandra Horsfield said.
While markets pulled back, he noted that moves made on Friday, when Iran said it would open the Strait of Hormuz, had not been fully reversed, suggesting at least some “improving sentiment is still valid.”
Outside the Middle East, British Prime Minister Keir Starmer is scheduled to address parliament on Monday; He faced calls to resign over his stance on the appointment of Peter Mandelson as US ambassador despite failing the review process.
Meanwhile, the outlook for continued negotiations between the United States and Iran appeared uncertain.
“Whether this stalemate will be just a detour on the road to resolution remains to be seen, but further volatility appears the most likely outcome,” Derren Nathan, head of equity research at Hargreaves Lansdown, said in a note.
Iran rejected new peace talks with the United States, hours after US President Donald Trump said he would send envoys to talks in Pakistan and launch new attacks on Iran if it did not accept his terms, Iran’s state news agency reported Sunday.
“We always thought there would be some undulations and junctions in this rather than a straight linear path to the outcome,” Investec’s Horsfield said.
The bonds that recovered on Friday were withdrawn and the yield on the benchmark 10-year Treasury bonds increased by 2.6 basis points to 4.2697 percent, while the yield on the German 10-year government bonds last increased by 3.6 basis points to 3.0015 percent.
The dollar, which has been sold for most of the past two weeks, remained generally stable, trading at $1.1761 per euro.
Wall Street indexes hit record highs on Friday, boosted by strong first-quarter earnings expectations, most of which came this week.
UK inflation data, US retail sales and European Purchasing Managers Index figures will also be released later in the week, but much of the markets’ focus will be on Gulf shipping.
“The critical barometer of geopolitical risk boils down to a single data point: the number of ships transiting the Strait of Hormuz,” said Bob Savage, head of markets macro strategy at BNY.
“Peace talks are important, but the immediate focus is on oil and other supply shortages fueling inflation.”
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