Washington (awp/afp) – Global stock markets ended without a clear direction on Monday after the rejection by the United States of Tehran’s counter-proposal for a lasting ceasefire in the Middle East.
Paris fell (-0.69%) and Frankfurt ended balanced (+0.05%). London (+0.36%) and Milan (+0.76%) ended slightly higher. In Zurich, the SMI finished balanced (+0.01%).
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 (American) market decided today that geopolitical issues were just background noise,” commented Steve Sosnick of Interactive Brokers to AFP.
Investors “largely ignored” Monday’s rise in oil prices caused by the American rejection of Tehran’s counter-proposal for a lasting ceasefire in the Middle East, according to the analyst.
The Iranian response to the latest American proposal was deemed “to be put in the garbage can” by the American president in a press conference at the White House on Monday.
“There is a slight concern about a possible worsening of the situation in Iran, but, at the moment, nobody really fears that it will happen,” said Patrick O’Hare of Briefing.com.
Oil prices on the rise
Contrary to Wall Street, the deadlock in negotiations has made operators in the oil market tense as it could “exacerbate the regional supply shock,” warn analysts from Eurasia Group.
The price of a barrel of Brent crude from the North Sea, for delivery in July, gained 2.88% to $104.21.
Its American equivalent, West Texas Intermediate, for delivery in June, rose 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,” emphasize the experts from Eurasia.
During a phone call with a Fox News journalist, Donald Trump mentioned that he was considering restarting his operation to protect ships from crossing this strategic strait, after more than two months of blockade.
Even in the hypothetical scenario of the 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 from Societe Generale.
Only 3.9 million barrels per day pass through the Strait of Hormuz compared to 20 Mb/d before the war, estimates Helge Andre Martinsen, senior energy analyst for DNB Carnegie.
Bond rates tension
The rise in oil prices maintains tension on sovereign debt interest rates, in anticipation of a possible rate hike during the next ECB meeting in mid-June.
The 10-year German yield, the reference on the continent, reached 3.04%, up from 3.00% on Friday evening. The French equivalent was at 3.66%, up from 3.62%.
In the US, the ten-year yield on state bonds tightened to 4.41% from 4.35%.
The greenback was nearly stable against the euro (+0.04%), at 1.1781 dollar per euro.
American inflation under scrutiny
Markets are preparing for new data on price increases in the United States, including the Consumer Price Index (CPI) on Tuesday, followed by Producer Price Inflation (PPI) on Wednesday.
“Everyone understands that the rise in energy prices will lead to an increase in inflation. The question is by how much,” explains Steve Sosnick.
Figures meeting expectations could reinforce the idea that the Federal Reserve (Fed) does not need to raise rates this year, according to Ipek Ozkardeskaya, analyst for Swissquote Bank.
Prior to the war, analysts anticipated at least two rate cuts by the American Federal Reserve before the end of the year. Now, no cuts are expected in 2026, according to the CME FedWatch monitoring tool.
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