Global stock markets ended without a clear direction on Monday after the rejection of the American proposal for a lasting ceasefire in the Middle East by Tehran.
Paris declined (-0.69%) and Frankfurt ended balanced (+0.05%). London (+0.36%) and Milan (+0.76%) ended slightly higher.
In New York, the Nasdaq (+0.10%) and the broader S&P 500 index (+0.19%) once again reached new 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” on Monday the new rise in oil prices caused by the American rejection of Iran’s counterproposal 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”, said the American president at the White House on Monday.
“There is a slight concern about a possible worsening of the situation in Iran, but at the moment, no one really fears that it will happen,” according to Patrick O’Hare of Briefing.com.
Oil prices rise again
Contrary to Wall Street, the deadlock in negotiations has worried operators in the oil market as it could “worsen the regional supply shock,” warned analysts at Eurasia Group.
The price of a barrel of Brent crude oil, for delivery in July, rose 2.88% to $104.21.
Its American equivalent, the West Texas Intermediate barrel, for delivery in June, gained 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,” emphasized experts at Eurasia.
During a phone call with a Fox News journalist, Donald Trump mentioned considering restarting the operation to protect ships crossing this strategic passage after more than two months of blockage.
Even in the hypothetical scenario of the Strait of Hormuz reopening 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 at Société Générale.
Only 3.9 million barrels per day pass through the Strait of Hormuz now, compared to 20 million per day before the war, according to Helge André Martinsen, senior energy analyst for DNB Carnegie.
Interest rate tension
The rise in oil prices keeps tension on sovereign debt interest rates, awaiting a possible rate hike at the next European Central Bank (ECB) meeting in mid-June.
The 10-year German yield, a reference on the continent, reached 3.04%, up from 3.00% on Friday evening. The French equivalent settled at 3.66%, up from 3.62%.
In the US, 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 for one euro.
American inflation under scrutiny
Markets are preparing to receive new data on rising prices in the United States, including the Consumer Price Index (CPI) on Tuesday, and the Producer Price Index (PPI) on Wednesday.
“Everyone understands that rising energy prices will lead to inflation. The question is how much,” explained Steve Sosnick.
Figures meeting expectations could reinforce the idea that it is not necessary for the Federal Reserve (Fed) to raise rates this year, according to Ipek Ozkardeskaya, analyst for Swissquote Bank.
Before the war broke out, 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.
