(March 27): A mild rebound in US stocks faded on Friday while bonds remained under pressure as oil rose, with traders growing more nervous about a protracted war in the Middle East.
S&P 500 futures erased a 0.7% advance after the benchmark posted its biggest daily loss since the start of the conflict. Brent gained 1.8% towards US$110 ($141.55) a barrel. Treasuries fell alongside global bonds, with two-year US yields climbing three basis points above 4%. The dollar was little changed while gold gained 1.3%.
US President Donald Trump pushed back his deadline for Iran to strike a deal with the US as the two sides remain far apart after nearly a month of attacks that have damaged energy infrastructure across the Gulf and effectively shut a vital artery for oil and gas shipments.
Traders fear that the longer the war drags on, the broader the impact on energy supplies and oil prices, stoking fears of an inflationary spiral that could force central banks to tighten monetary policy. Also weighing on sentiment was China’s move to open retaliatory trade probes into the US ahead of an expected summit between Trump and Chinese President Xi Jinping.
The limited rebound “indicates to us that investors are losing faith in Donald Trump and his announcements,” said Joachim Klement, the head of strategy at Panmure Liberum. “This is a dangerous development because it could lead to markets panicking. In this case, a major market intervention by central banks may become necessary.”
See also: As the war drags on, is it time for investors here to ‘dig in’?
Sentiment remained fragile as traders monitored conflicting news about de-escalation and attacks. The Wall Street Journal reported the Pentagon is looking at sending up to 10,000 additional ground troops to the Middle East. Israel said it struck ballistic missile production sites across Iran.
Meanwhile, Treasury Secretary Scott Bessent said a US insurance programme meant to boost shipping through the Strait of Hormuz will begin soon, a move that may help revive flows of much of the world’s oil and gas supplies. The near-total closure of the waterway has meant millions of barrels of lost daily oil output, while pushing up product prices from diesel to jet fuel.
The United Arab Emirates told allies that it would participate in a multinational maritime task force intended to reopen the Strait of Hormuz, as it lobbies to form a coalition to ensure shipping is able to pass through the vital Gulf waterway, the Financial Times reported.
See also: Oil slips, US stock futures gain on Iran extension
“The war in Iran and the resulting surge in oil prices continue to dampen risk appetite,” said Adam Turnquist at LPL Financial. “Any sustainable market recovery will require meaningful progress towards a peace agreement and a reopening of the Strait of Hormuz.”
Corporate news:
- Novartis AG has agreed to acquire biotech firm Excellergy Inc for as much as US$2 billion, in a deal that will strengthen its portfolio of treatments for food allergies and other immunology conditions.
- Apple Inc plans to open Siri to outside artificial intelligence (AI) assistants, a major move aimed at bolstering the iPhone as an AI platform.
- Anthropic PBC is considering going public as soon as in October, according to people familiar with the matter.
- Pernod Ricard SA and Brown-Forman Corp, the owner of Jack Daniel’s whiskey, are discussing a merger as the alcoholic drink companies look at ways to consolidate amid an industry downturn.
Some of the main moves in markets:
Stocks
- The Stoxx Europe 600 was 0.6% lower as of 8.34am London time on Friday
- S&P 500 futures rose 0.1%
- Nasdaq 100 futures were little changed
- Futures on the Dow Jones Industrial Average were little changed
- The MSCI Asia-Pacific Index fell 0.5%
- The MSCI Emerging Markets Index fell 0.7%
Currencies
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- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at US$1.1522
- The Japanese yen was little changed at 159.86 per dollar
- The offshore yuan was little changed at 6.9185 per dollar
- The British pound was little changed at US$1.3318
Cryptocurrencies
- Bitcoin fell 1.1% to US$68,230.15
- Ether fell 0.4% to US$2,056.39
Bonds
- The yield on 10-year Treasuries advanced three basis points to 4.45%
- Germany’s 10-year yield advanced three basis points to 3.10%
- Britain’s 10-year yield advanced five basis points to 5.03%
Commodities
- Brent crude rose 1.7% to US$109.80 a barrel
- Spot gold rose 1.3% to US$4,434.38 an ounce
Uploaded by Tham Yek Lee
