Washington – Global stock markets ended without a clear direction on Monday after the American rejection of Tehran’s counter-proposal for a lasting ceasefire in the Middle East.
Paris declined (-0.69%) and Frankfurt ended balanced (+0.05%). London (+0.36%) and Milan (+0.76%) closed slightly higher. In Zurich, the SMI finished balanced (+0.01%).
In New York, the Nasdaq (+0.10%) and the broader S&P 500 index (+0.19%) once again reached new highs, ending 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 from Interactive Brokers to AFP.
Investors largely ignored on Monday the new rise in oil prices caused by the American rejection of Tehran’s counter-proposal 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 press briefing 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 this will happen,” said Patrick O’Hare from Briefing.com.
Oil prices rise again
Contrary to Wall Street, the deadlock in negotiations has put pressure on the oil market operators as it could “worsen the regional supply shock,” warn analysts from Eurasia Group.
The price of Brent crude from the North Sea for delivery in July increased by 2.88% to $104.21 per barrel.
Its American counterpart, West Texas Intermediate, for delivery in June, rose by 2.78% to $98.07.
“No decisive progress is in sight (and) at the same time, traffic in the Strait of Hormuz has come to a standstill,” emphasized Eurasia experts.
During a phone call with a Fox News journalist, Donald Trump mentioned that he was considering restarting the operation to protect ships from crossing this critical passage, after more than two months of blockade.
Even in the hypothetical scenario of a reopening of the Strait of Hormuz in mid-May, it would take “45 to 50 days” before a real “relief for the market,” as production resumes and maritime traffic normalizes, according to analysts at Societe Generale.
In total, only 3.9 million barrels per day pass through the Strait of Hormuz, compared to 20 Mb/d before the war, estimated Helge Andre Martinsen, senior energy analyst for DNB Carnegie.
Interest rate tension
The rise in oil prices keeps the tension on sovereign debt interest rates, awaiting a potential rate hike at the next meeting of the European Central Bank (ECB) in mid-June.
The German 10-year yield, the benchmark on the continent, reached 3.04%, up from 3.00% on Friday evening. The French equivalent settled at 3.66%, up from 3.62%.
Across the Atlantic, the ten-year yield on US government bonds increased to 4.41% from 4.35%.
The greenback was almost stable against the euro (+0.04%), at 1.1781 dollars to one euro.
American inflation under scrutiny
Markets are preparing to welcome new data on price increases in the United States, including the Consumer Price Index (CPI) on Tuesday, followed by the Producer Price Index (PPI) on Wednesday.
“Everyone understands that the rise in energy prices will lead to inflation. The question is by how much,” explained Steve Sosnick.
Figures in line with expectations could reinforce the idea that there is no need for the Federal Reserve (Fed) to raise rates this year, suggested Ipek Ozkardeskaya, analyst for Swissquote Bank.
Before the war broke out, analysts anticipated at least two rate cuts by the American Federal Reserve before the end of the year. No cuts are now expected in 2026, according to the CME FedWatch monitoring tool.
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