>> Reopening of Hormuz: sharp increase in optimism on global markets
>> Middle East: investor optimism sends stock markets soaring, oil prices retreat
Une station-service à Sofia le 5 mai. Photo: AFP/VNA/CVN
Paris fell (-0.69%) and Frankfurt ended balanced (+0.05%). London (+0.36%) and Milan (+0.76%) closed slightly higher.
In New York, the Nasdaq (+0.10%) and the broader S&P 500 index (+0.19%) once again reached record highs, closing at 26,274.13 and 7,412.84 points respectively. The Dow Jones gained 0.19%.
“The (US) market decided today that geopolitical issues were just background noise,” commented Steve Sosnick of Interactive Brokers to AFP.
Investors on Monday, May 11 largely ignored the new rise in oil prices caused by the US rejection of Tehran’s counterproposal for a lasting ceasefire in the Middle East, noted the analyst.
The Iranian response to the latest American proposal was deemed “to be thrown in the trash” by the US president in the White House press conference on Monday, May 11.
“There is a slight concern about a possible escalation in Iran, but for now, no one really fears that it will happen,” said Patrick O’Hare from Briefing.com.
Oil returns to an upward trend
Contrary to Wall Street, the deadlock in negotiations has unsettled operators in the oil market as it could “worsen the regional supply shock,” warn analysts at Eurasia Group.
The price of a barrel of Brent crude from the North Sea for July delivery rose by 2.88% to $104.21.
Its American equivalent, the barrel of West Texas Intermediate for June delivery, rose by 2.78% to $98.07.
“No decisive progress is in sight (and) at the same time, traffic in the Strait of Hormuz is at a standstill,” according to Eurasia experts.
During a phone call with a Fox News journalist, Donald Trump said he was considering restarting his ship protection operation to cross this narrow passage after more than two months of blockage.
Even in the hypothetical scenario of a reopening of the Strait of Hormuz in mid-May, it would take “45 to 50 days” before a “real relief for the market” as production resumes and maritime traffic normalizes, according to analysts at Societe Generale.
In total, only 3.9 million barrels per day (Mb/d) pass through the Strait of Hormuz compared to 20 Mb/d before the war, estimated Helge Andre Martinsen, senior energy analyst for DNB Carnegie.
Tension in interest rates
The rise in oil prices maintains pressure on sovereign debt interest rates, pending a possible interest rate hike at the next European Central Bank (ECB) meeting in mid-June.
The 10-year German bond yield, a reference on the continent, reached 3.04%, up from 3.00% on Friday evening, May 8. The French equivalent stood at 3.66%, up from 3.62%.
Across the Atlantic, the yield on the ten-year US government bonds tightened to 4.41% from 4.35%.
The greenback was almost stable against the euro (+0.04%), at $1.1781 for one euro.
American inflation under scrutiny
The markets are gearing up to welcome new data on rising prices in the United States, including the Consumer Price Index (CPI) on Tuesday, May 12, followed by the Producer Price Index (PPI) on Wednesday, May 13.
“Everyone understands that the rise in energy prices will lead to an increase in inflation. The question is by how much,” explained Steve Sosnick.
Figures in line with expectations could reinforce “the idea that there is no need for the Federal Reserve (Fed) to raise rates this year,” said Ipek Ozkardeskaya, analyst for Swissquote Bank.
Before the war broke out, analysts anticipated at least two rate cuts by the US Federal Reserve by the end of the year. No cuts are now expected in 2026, according to the CME FedWatch monitoring tool. AFP/VNA/CVN
