Washington – Global stock markets ended with no 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 broad S&P 500 index (+0.19%) once again reached new highs, finishing 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, from Interactive Brokers, to AFP.
Investors on Monday “largely ignored” the new rise in oil prices, caused by the rejection by the United States of Tehran’s counter-proposal for a lasting ceasefire in the Middle East, noted the analyst.
The Iranian response to the latest American proposal is “to be thrown in the trash can,” judged the American president in a press conference at the White House on Monday.
“There is a slight concern about a possible escalation of the situation in Iran, but, for now, no one really fears that this will happen,” said Patrick O’Hare, from Briefing.com.
Oil prices rise again
In contrast to Wall Street, the deadlock in negotiations has unsettled operators in the oil market as it could “worsen the regional supply shock,” warn Eurasia Group analysts.
The price of a barrel of Brent crude from the North Sea, for delivery in July, rose by 2.88% to $104.21.
Its American equivalent, the West Texas Intermediate barrel, for delivery in June, 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,” underline Eurasia experts.
During a phone call with a Fox News journalist, Donald Trump said he was considering restarting his operation to protect ships crossing this passage, after more than two months of blockade.
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, estimate analysts from Societe Generale.
Only 3.9 million barrels per day (Mb/d) pass through the Strait of Hormuz compared to 20 Mb/d before the war, according to Helge Andre Martinsen, senior energy analyst for DNB Carnegie.
Tension in interest rates
The rise in oil prices maintains tension on sovereign debt interest rates, awaiting a possible hike in the deposit rate at the next European Central Bank (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. Its French equivalent stood at 3.66%, up from 3.62%.
In the United States, the ten-year yield on American state bonds tightened to 4.41% from 4.35%.
The greenback was almost stable against the euro (+0.04%), at 1.1781 dollars per euro.
American inflation scrutinized
Markets are preparing to welcome new data on price increases in the United States, including the Consumer Price Index (CPI) on Tuesday, and the Producer Price Index (PPI) on Wednesday.
“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 confirm the idea that “it is not necessary for the Federal Reserve (Fed) to raise rates this year,” said Ipek Ozkardeskaya, analyst for Swissquote Bank.
Prior to the outbreak of war, analysts anticipated at least two rate cuts by the American Federal Reserve by the end of the year. No cuts are now expected in 2026, according to the CME FedWatch monitoring tool.
AFP/rp
