Stan Choe
Oil prices are resuming their rise because of the war with Iran, but US stocks are holding steadier this time around.
The S&P 500 rose 0.4 per cent and added to its gain from the day before, which was its best since the war began. The Dow Jones was up 151 points, or 0.3 per cent, and the Nasdaq composite was 0.5 per cent higher. The Australian sharemarket is set to advance, with futures 16 points, or 0.2 per cent, at the open. The ASX rose 0.4 per cent on Tuesday as the Reserve Bank announced an expected interest rate hike, but the central bank’s board was split on the widely expected move, boosting speculation that further hikes may be far from certain.
The Australian dollar was trading at US71.14¢ at 5.18am AEDT.
Wall Street advanced overnight in a break, for now at least, from the usual playbook since the start of the war, where stock prices have tended to go in the opposite direction of oil prices. The fear in financial markets has been that a long-term disruption to the global flow of oil could send prices so high for so long that it damages the global economy.
The price for a barrel of benchmark US crude rose 1.8 per cent to $US95.20. Brent crude, the international standard, climbed 2.4 per cent to $US102.58. But they pared even bigger gains from earlier in the morning, and they’re still below where they were at the end of last week.
Delta Air Lines also offered an encouraging signal about the strength of the economy after raising its forecast for revenue for the first three months of 2026. It said it’s seen demand to fly accelerate into March from both businesses and households.
And that looks to be enough to offset higher prices for jet fuel because of the spike in oil prices. Delta said it still expects to report a profit for the start of 2026 that’s in line with its earlier forecast.
Delta’s stock flew 7.2 per cent higher, and it helped other airline stocks trim their own sharp losses for the year so far. United Airlines climbed 3.8 per cent, and Southwest Airlines rose 3 per cent.
American Airlines gained 4 per cent after saying it’s also likely to report stronger revenue growth for the start of this year than it had forecast earlier.
Another big winner was Uber Technologies, which rose 5.9 per cent after announcing an expansion of its partnership with Nvidia. They plan to launch a fleet of autonomous vehicles using Nvidia’s technology, beginning with Los Angeles and San Francisco in the first half of next year.
Some beaten-down stocks in the financial industry, meanwhile, recovered losses from earlier in the year. That includes several swept up in worries about whether software businesses and others potentially under threat by AI-powered competitors will pay back all their loans. Blue Owl Capital gained 5.7 per cent, and Ares Management rose 5.4 per cent.
They helped offset a 3.2 per cent drop for Cencora after the pharmaceutical sourcing and distribution services company said it’s looking for a new chief financial officer because James Cleary will retire at the end of June.
The US stock market has a track record of bouncing back relatively quickly from military conflicts in the Middle East and elsewhere, as long as oil prices don’t stay too high for too long. Many professional investors are expecting that to be the case again, which has helped keep US stock prices near their record levels.
For all its dramatic swings over the last couple of weeks, including several that struck hour to hour, the S&P 500 is less than 4 per cent below its all-time high.
That’s even as Treasury yields have climbed on expectations that higher oil prices will keep the Federal Reserve from resuming its cuts to interest rates for a while. Higher yields push downward on prices for stocks and all kinds of investments.
The yield on the 10-year Treasury eased to 4.19 per cent from 4.23 per cent late on Monday, but it remains well above the 3.97 per cent level it was at before the war with Iran began.
The Fed will make its next announcement on interest rates on Wednesday afternoon, and traders see virtually no chance of a cut, according to data from CME Group.
Cuts to interest rates by the Fed would give the economy and job market a boost, and President Donald Trump has angrily been calling for them. But reductions would also worsen inflation.
In stock markets abroad, European indexes rose following a mixed finish in Asia. Indexes rose 0.8 per cent in London and fell 0.9 per cent in Shanghai for two of the world’s bigger moves.
AP
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