By Ankur Banerjee SINGAPORE, April 2 (Reuters) - Stocks inched higher, the dollar softened and oil slipped on Thursday as investors held their collective breath ahead of a speech from U.S. President
Oil prices soar, and stocks end mixed in volatile trade
Market Reactions and Economic Impacts Amid Iran Conflict
By Chris Prentice and Marc Jones
NEW YORK/LONDON, April 2 (Reuters) - Oil prices surged on Thursday and equities markets around the world were mixed in volatile trade as traders weighed conflicting developments and remarks related to the Iran war.
Developments in the Strait of Hormuz
European shares trimmed losses, as some major Wall Street indexes and U.S. bond prices clawed back gains on news that Iran was drafting a protocol with Oman to monitor traffic in the Strait of Hormuz.
But world oil prices surged nearly 8% and U.S. crude soared more than 11% the day after U.S. President Donald Trump said in a prime-time address that the U.S. would hit Iran "extremely hard" in the coming weeks and "bring them back to the Stone Ages where they belong."
On Wall Street, stocks ended mixed in a choppy last trading day of the week ahead of the Good Friday holiday.
Gold and Currency Movements
Gold prices fell as the U.S. dollar gained.
Government bond yields jumped on expectations that an inflation spike would force central banks to raise interest rates, or at least keep them on hold. [GVD/EUR][US/]
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, climbed 0.44%.
Expert Commentary
"Over the past 48 hours, Tehran and Washington have exchanged a cacophony of statements, some suggesting rising odds of de-escalation," BCA Research's Felix-Antoine Vezina-Poirier said. "Our GeoMacro strategists offer simple guidance for weighing volatile headlines: Stick to the facts. First, shipping through Hormuz has picked up over the past few days. Second, Iran is deliberately shifting away from GCC (Gulf Cooperation Council) targets toward Israeli ones."
Wall Street and Global Stock Performance
Major Index Movements
WALL STREET POINTS LOWER
MSCI's gauge of stocks across the globe fell 0.35% to 993.18.
On Wall Street, the Dow Jones Industrial Average fell 0.13% to 46,504.67, the S&P 500 reversed course to gain 0.11% to 6,582.69 and the Nasdaq Composite added 0.18% to 21,879.18.
In a closely watched address on Wednesday, Trump said U.S. attacks on Iran would be intensified over the next two to three weeks. That came just a day after he told Reuters the U.S. would be "out of Iran pretty quickly."
The pan-European STOXX 600 index and Europe's broad FTSEurofirst 300 index both lost 0.2%.
South Korea's Kospi index slid 4.7%.
Market Sentiment and Analyst Views
"The only thing that really matters is whether the Strait of Hormuz will open soon," said Prashant Newnaha, senior rates strategist at TD Securities.
Trump earlier said on Wednesday the U.S. did not need the key oil gateway.
Commodity and Currency Market Updates
Gold and Oil Prices
Spot gold fell 1.85% to $4,669.05 an ounce and U.S. gold futures settled down 2.8% at $4,679.70.
India's central bank moved to ban trading of so-called non-deliverable forwards in an effort to halt the rupee's run of record lows. The move sent the currency up 2%, although analysts questioned how long the rebound would last.
Brent futures rallied to end up 7.78% at $109.03 a barrel, as U.S. West Texas Intermediate settled up 11.41% to $111.54.
Further Analyst Insights
"The fact that we can expect 2-3 more weeks of action, boots on the ground were not ruled out (during Trump's TV address) and that threats to hit infrastructure were reiterated, will put the market back on the defensive," Pictet Asset Management's Jon Withaar said.
Bond Yields and Interest Rate Expectations
The yield on benchmark U.S. 10-year notes fell 1.6 basis point to 4.305%. The two-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, was flat at 3.803%.
Euro zone benchmark Bund yields snapped a three-day decline and traders raised bets for interest-rate hikes. The yield on the benchmark German 10-year rose 0.1 basis points to 2.996%.
(Additional reporting by Ankur Banerjee in Singapore. Editing by Mark Potter, Will Dunham and David Gregorio)
