By Jamie McGeever ORLANDO, Florida, April 1 (Reuters) - Stocks rose on Wednesday and oil and the dollar fell on continued optimism that de-escalation in the Middle East is imminent. U.S. President
Global Markets Gain as Hopes Rise for Middle East Conflict Resolution
Market Reactions and Key Developments
By Jamie McGeever
Optimism Over Middle East De-escalation
ORLANDO, Florida, April 1 (Reuters) - Stocks rose on Wednesday and oil and the dollar fell on continued optimism that de-escalation in the Middle East is imminent. U.S. President Donald Trump said the U.S. will leave Iran "pretty quickly", and attention now turns to his televised address later on Wednesday evening.
Central Banks and Treasury Holdings
In my column today I look at whether central banks are selling Treasuries, an issue back in the spotlight as Fed custody holdings sink to a 16-year low. The answer isn't straightforward - they probably are, but not as fast as you'd think.
Recommended Reading
If you have more time to read, here are a few articles I recommend to help you make sense of what happened in markets today.
- Trump says U.S. may exit Iran war soon and threatens to quit NATO
- A war meant to break Iran could leave Tehran stronger, and Gulf exposed
- Factory input costs soar worldwide as Iran war snarls up supply chains
- Mega IPOs set to test U.S. market depth despite volatility
- EXCLUSIVE-BoE's Bailey invokes 2008 lessons amid private credit scrutiny
Today's Key Market Moves
Stock Market Performance
- STOCKS: Sky of blue, sea of green. In Asia, South Korea +9%, Japan +5%. In Europe, STOXX 600 +2.5%, FTSE 100 +1.8%. On Wall Street, S&P 500 +0.7%, Nasdaq +1.2%. MSCI World has biggest 2-day gain since last April.
Sector and Share Highlights
- SECTORS/SHARES: Eight S&P 500 sectors rise. Industrials, materials, tech, comms services rise 1% or more. Energy -4%, biggest fall in a year, Nike -15%, Chevron -5%. Intel +8%, Eli Lilly +5%.
Currency and Bond Markets
- FX: Dollar -0.4%, posts biggest two-day decline since early Feb. Biggest G10 FX gainer is GBP, biggest EM gainer is CLP.
- BONDS: A quiet day for U.S. Treasuries, yields up 1-2bps across the curve. Rates futures drifting back to price in Fed cut this year rather than hike.
Commodities and Metals
- COMMODITIES/METALS: Oil down: Brent -3%, WTI -2%. Gold +2%. U.S. nat gas hits 6-month closing low.
Today's Talking Points
The Televised Address
* The address will be televised
U.S. President Donald Trump will deliver a prime-time address to the nation on Wednesday night, and is expected to "provide an important update" on Iran. It is likely to be market-moving, although in which direction, it's not clear.
Uncertainty Remains
That's the problem - there is no clarity. In recent days Trump has said the war is over, or the U.S. will continue bombing; re-opening the Strait of Hormuz is central to a deal, or it's not; there could be troops on the ground, or not; a deal is close at hand, or it's not. Will his TV address provide clarity?
March Madness
Despite the month of March bringing war, $100 oil and huge global supply shocks, consumers, businesses and investors seem remarkably upbeat. Sentiment surveys and purchasing managers' index indicators point to a general sense of optimism that any economic pain will be short-lived.
Investor Sentiment
Investors clearly want to buy the dip. The question now is whether this optimism translates into the hard activity data. It's difficult to imagine no hit to production, trade, spending or investment. But we've been surprised before.
U.S. Natural Gas Prices
* U.S. nat gas at 6-month ... low?
U.S. natural gas futures fell on Tuesday to their lowest level since the Middle East conflict started on February 28, and posted their lowest close in six months. Yes, you read that correctly - lowest.
Factors Affecting Prices
While global energy prices remain volatile and elevated, especially in Asia and Europe, U.S. gas prices are being pressured by high storage and mild weather. The front month closed on Tuesday at $2.819/mBtu, down 20% from the post-February 27 peak of $3.494 on March 9.
What Could Move Markets Tomorrow?
- Developments in the Middle East
- Energy market moves
- Australia trade (February)
- South Korea inflation (March)
- Canada trade (February)
- U.S. Challenger layoffs (March)
- U.S. weekly jobless claims
- U.S. trade (February)
- U.S. Dallas Fed President Lorie Logan speaks
Additional Information
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Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
(Reporting by Jamie McGeever; Editing by Nia Williams)
