(March 16): US stocks rose Monday as investor concerns that the prolonged closure of the Strait of Hormuz would impact global supply chains abate.
A Pakistani oil tanker cleared the Strait of Hormuz over the course of Sunday, according to ship-tracking data, joining two LPG tankers. They were among a few ships able to cross the chokepoint since it was closed around two weeks ago due to the war in Iran. The Indian government is in talks to get six other vessels through the trade artery.
S&P 500 Index rose 1% as of 9:40am in New York, reversing a four-day losing streak. The tech-heavy Nasdaq 100 increased 1%. Brent crude oil prices fell 1.1% to trade around US$102 a barrel. The Cboe Volatility Index — Wall Street’s so-called “fear gauge” — is down to 24.31 after highs last week.
“The fundamentals going into this war were actually quite good,” Barbara Reinhard, the chief investment officer of multi asset strategies and solutions at Voya Investment Management said in an interview with Bloomberg TV. She noted decreasing wage inflation, encouraging core personal consumption data and good earnings support.
This morning, Iran’s Foreign Minister Abbas Araghchi said that the country isn’t requesting a ceasefire as it launched fresh attacks across the Persian Gulf, forcing a suspension of flights at Dubai’s main airport. The United Arab Emirates’ key port, Fujairah, was hit again by a drone attack, temporarily halting oil exports from the country’s only export route outside of the Strait of Hormuz.
“US equity markets are breathing a sigh of relief that energy prices are stable coming out of the weekend,” said Michael O’Rourke, chief market strategist at Jonestrading. “We have a bounce driven by hedges being covered and mild optimism.”
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Cloud provider Nebius Group NV shares spiked 11% after Meta Platforms Inc inked a deal with the company to pay as much as US$27 billion ($34.5 billion) over the next five years for artificial intelligence infrastructure. Last week, chipmaker Nvidia Corp. said it would invest US$2 billion in Nebius as part of a strategic partnership.
“The ongoing conflict now adds a third headwind to this market, joining private credit concerns and AI anxiety,” said Tom Essaye of the Sevens Report. “While media coverage is rightly focused mostly on the war, all three represent risks to the rally and so we need to monitor all three simultaneously.”
Traders will also be looking toward the Federal Reserve’s interest-rate decision, which will be released on Wednesday, with analysts widely expecting officials to hold rates steady as the war casts uncertainty into the economic outlook. The producer price index, a key inflation measure, is also expected Wednesday.
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“Before the outbreak of hostilities, inflation data had been moving in a relatively encouraging direction,” said Daniela Hathorn, senior market analyst at Capital.com, noting that the US consumer price index data in February showed slowing inflation. “For some economies, particularly the US where growth has remained relatively robust, there may be more room to absorb higher energy prices.”
Elsewhere, crypto-linked stocks like Circle Internet Group and Coinbase Global gained pre-market as bitcoin continues to outperform during the Iran war. Micron Technology shares are rising ahead of the chipmaker’s second quarter results, which will be posted later this week.
Uploaded by Magessan Varatharaja
