Wall Street set for record, oil climbs, ASX set to rise
Stan Choe
Oil prices are rising as the war with Iran threatens to prolong further, but the US stock market is still heading for more records.
The barrel price of Brent crude oil rose 2.7 percent to $104.02 after President Donald Trump said the US-Iran ceasefire was on “life support” after Iran rejected its latest offer to end the war. The rejection raises the risk of Trump’s upcoming visit to China this week, where he may encourage President Xi Jinping to pressure Iran to make concessions. Xi has influence because China is the largest buyer of Iran’s sanctioned crude oil.
The war pushed the price of Brent above nearly $70 a barrel and unleashed a painful burst of inflation in the global economy. This is because it has closed the Strait of Hormuz and stranded oil tankers in the Persian Gulf instead of delivering crude oil to customers around the world.
Still, the U.S. stock market has been breaking records lately on hopes that the war won’t keep oil prices high for too long. Meanwhile, U.S. companies are making more profits than analysts expected, while signals suggest the U.S. economy is staying afloat despite households being discouraged by expensive gasoline and tariffs.
On Wall Street, the S&P 500 rose 0.3 percent from its record. The Dow Jones gained 107 points, or 0.2 percent, and the Nasdaq composite rose 0.3 percent and is on track to set its own all-time high. The Australian share market is poised for a rally as it points to a gain of 18 points, or 0.2 per cent, at the open at 4.59pm AEST. The ASX lost 0.5 per cent on Monday. The Australian dollar was trading at 72.50¢.
Mosaic helped drag the market after the fertilizer company reported much weaker results than analysts expected in the latest quarter. The company enjoys higher prices for its products, but it is also struggling with much higher prices for sulfur and other raw materials due to logistical disruptions created by the war with Iran.
Mosaic’s shares fell 1.5 percent, and most stocks in the S&P 500 sank rather than rose.
Shares of companies whose customers have the least support for higher gas prices have struggled, with Dollar General falling 6.8 percent. Businesses with high fuel bills similarly suffered some of the market’s sharpest losses; They included declines of 4.4 percent at Carnival and 3.2 percent at Southwest Airlines.
Fox helped offset that, rising 4.8 percent in the latest quarter after a stronger-than-expected profit and revenue report.
According to FactSet, four out of every five companies in the S&P 500 index that have reported quarterly results so far have exceeded profit expectations and are on track to deliver overall growth of about 28 percent. If that turns out to be the case, this would be the best growth since the end of 2021.
Outside of earnings reports, Beazer Homes USA gained 34.8 percent after Dream Finders Homes offered to acquire it in a deal valued at about $704 million. The merger would create the nation’s seventh-largest homebuilder, and Dream Finders is asking Beazer’s shareholders to force its management and board to approve the deal after it has made several attempts itself.
Dream Finders gained 1.5 percent in value.
Technology stocks were also strong, continuing their big rise amid big spending from the boom in artificial intelligence technology. Nvidia’s 2.7 percent and Micron Technology’s 7.8 percent gains were two of the strongest forces pushing the S&P 500 upwards.
In foreign stock markets, indices across Europe and Asia were mixed. France’s CAC 40 index fell 0.7 percent and South Korea’s Kospi index rose 4.3 percent for two of the world’s biggest moves
In the bond market, Treasury yields have remained relatively stable. The 10-year yield rose to 4.40 percent from 4.38 percent at the end of Friday.
Yields have slowed slightly this month but remain well above where they were before the war began. Higher yields could increase rates on mortgages and other types of loans to U.S. households and businesses, which could slow the economy. Higher returns also tend to push down the prices of stocks and other types of investments.
The pace of sales of previously occupied U.S. homes was weaker than economists expected last month, a report released Monday said.
