Stan Choe
US stocks are jolting higher and recovering a chunk of their wartime losses as optimism entered markets following a report that President Donald Trump told aides he’s willing to end the military campaign against Iran even if the Strait of Hormuz remains largely closed.
The S&P 500 leaped 2.3 per cent and is heading toward its best day since the war began, a day after it fell more than 9 per cent below its all-time high set early this year. The Dow Jones was up 841 points, or 1.9 per cent, and the Nasdaq composite was 3.2 per cent higher.
The Australian sharemarket is set to jump, with futures at 4.56am AEDT pointing to a rise of 95 points, or 1.1 per cent, at the open. The ASX added 0.3 per cent on Tuesday. The Australian dollar is stronger at US68.92¢ at 5.18am AEDT.
The rebound came as movements for oil prices took some pressure off Wall Street. The price for a barrel of Brent crude oil, the international standard, fell 2.1 per cent to $US105.13. Benchmark US crude fell 0.7 per cent to $US102.12.
Oil prices have been dictating the US stock market’s sharp swings since the war began, with Brent shooting from roughly $US70 per barrel to as high as $US119 at times. The worry is that the war may last a long time and keep oil and natural gas from the Persian Gulf out of global markets, which could create a brutal blast of inflation.
Markets surged following a report from The Wall Street Journal regarding the Strait of Hormuz, a narrow waterway connecting the Persian Gulf to the open ocean, and a fifth of the world’s oil sails through it on a typical day.
To get the strait open, Trump could try diplomatic talks with Iran and then push allies in Europe and the Gulf to take the lead, according to the report.
On his social media network, Trump on Tuesday urged the United Kingdom and other countries to “build up some delayed courage, go to the Strait, and just TAKE IT.”
Trump’s own words have become less impactful for financial markets, after he touted what he called productive talks over the last week, only to turn around and threaten the “obliteration” of Iranian power plants.
Of course, oil prices could quickly revert to a spike if tankers carrying crude can’t get through the strait easily. Iran attacked a fully loaded Kuwaiti oil tanker in the Persian Gulf in the latest fighting that has shown few signs of lessening.
And oil prices have already shot high enough that inflation in Europe accelerated to 2.5 per cent in March, up from February’s 1.9 per cent.
In the United States, the price for a gallon of petrol topped $US4 ($5.80) per gallon for the first time since 2022. That’s squeezing budgets for US households and preventing them from spending on other things. Worries about that and pressured profit margins for companies have the S&P 500 on track to close Tuesday with its worst quarterly loss in nearly four years.
That three-month performance would have been worse if not for Tuesday’s slowdown for oil prices, which helped stocks of companies that have big fuel bills. Norwegian Cruise Line Holding steamed 4.5 per cent higher, and Delta Air Lines climbed 4.3 per cent to trim their losses for the year so far.
Tech stocks, meanwhile, were the strongest forces lifting the market. Marvell Technology climbed 11.4 per cent after Nvidia invested $US2 billion in the company and announced a partnership with it.
Nvidia rose 4.8 per cent and was the single strongest force lifting the S&P 500.
Centessa Pharmaceuticals soared 44.9 per cent after Eli Lilly said it was buying the company working on treatments for excessive daytime sleepiness and other neurological conditions. Lilly, which is paying up to $US7.8 billion if certain conditions are met, rose 2.8 per cent
They helped offset a 0.7 per cent drop for McCormick. The spice company is buying most of Unilever’s food business, including such brands as Hellmann’s, for cash and stock valuing it at $US44.8 billion.
In the bond market, Treasury yields eased again. The yield on the 10-year Treasury fell to 4.30 per cent from 4.35 per cent late Monday and from 4.44 per cent at the end of last week. That’s a significant move for the bond market.
Lower yields should pull downward on rates for mortgages and other loans for US households and businesses, which have been screaming higher since the war began. The yield on the 10-year Treasury was at just 3.97 per cent in late February, before worries about high oil prices pushed traders to erase bets for cuts to interest rates by the Federal Reserve this year.
Yields remained lower following a couple reports Tuesday on the US economy that came in better than economists expected. One said confidence among US consumers unexpectedly improved. The other said US employers were advertising more job openings at the end of February than expected, though fewer than the month before.
In stock markets abroad, indexes rose in Europe following a tougher finish in Asia. South Korea’s Kospi fell 4.3 per cent, and Japan’s Nikkei 225 lost 1.6 per cent for two of the bigger moves.
AP
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