By Jamie McGeever ORLANDO, Florida, March 23 (Reuters) - Oil sank and U.S. stocks rose on Monday on hopes that an end to the Middle East war could be in sight after U.S. President Donald Trump delayed
Market Rally: U.S. Stocks Surge, Oil Prices Plunge Amid Iran Tension Easing
Market Overview and Key Developments
By Jamie McGeever
ORLANDO, Florida, March 23 (Reuters) - Oil sank and U.S. stocks rose on Monday on hopes that an end to the Middle East war could be in sight after U.S. President Donald Trump delayed military strikes on Iran's power plants and indicated that early talks with Tehran have been held.
U.S. Consumers and Oil Prices
In my column today I look at why, for now at least, U.S. consumers can cope with $100-a-barrel oil - household balance sheets are in rude health and, perhaps surprisingly, gasoline and energy products account for a mere 2% of total consumption.
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.
- Iran denies talks with U.S. after Trump postpones strikes on power grid
- Trump's Iran war oil shield is cracking: Bousso
- Trump approved Iran operation after Netanyahu argued for joint killing of Khamenei, sources say
- Fed's Miran still believes Fed should cut interest rates - Bloomberg TV
- BOJ's narrative shift signals dogged commitment to rate hikes
Today's Key Market Moves
Stock Market Performance
- STOCKS: Asia tumbles: Japan, China down >3%, South Korea down >6%. But Europe rebounds ~1%; U.S. indexes have best day since early February, up 1-2.5%. Brazil +3.5%, biggest rise in three years.
Sector and Share Highlights
- SECTORS/SHARES: All 11 sectors on the S&P 500 rise. Consumer discretionaries +2.5%, tech +1.5%, even energy +1%. Airlines, cruise ship operators outperform, Palantir +7%. Estee Lauder -7%
Currency and Bond Markets
- FX: Dollar index -0.7%, greenback slumps more than 1% vs several emerging currencies like BRL, CLP, HUF. Biggest G10 mover is NOK, down ~2% as oil sinks.
- BONDS: U.S. yields fall 7 bps at short end, bull steepening the curve. Today's rollercoaster epitomized by UK gilts - 10-year yield hits highest since 2008 above 5%, then the 2-year yield has biggest decline in a year.
Commodities and Metals
- COMMODITIES/METALS: Oil plunges 10%. Gold hits 4-month low, ends down 2%; silver +2%.
Today's Talking Points
TACO Bell Rings: Investor Sentiment
Whether the U.S. postponing strikes on Iran's energy complex marks the beginning of the end of the war or has a lasting market impact remains to be seen. But Monday's sudden rebound in risk appetite shows how much investors are hoping it proves to be the latest "Trump Always Chickens Out" signal to buy.
The natural bias toward "TACO" trades is understandable, although in this case, caution is still required. The damage done to oil and LNG supply, facilities, and refining capacity will take months to fully heal, and the world will be living with high energy costs for even longer.
Safe-Haven, Where Art Thou?
Gold's plunge since the Middle East conflict erupted nearly a month ago has been remarkable, and raises an uncomfortable question for investors: is there such a thing as a safe-haven asset any more?
The Role of Gold in Crisis
If gold can't shine amid war, a global oil shock, falling stock markets and rising inflation, where can investors turn? Perhaps gold has become just another speculative asset, and the "one size fits all" concept of a safe haven is gone. In times of crisis, investors now have to be more nimble, flexible, and think outside the box.
Sound and Revision: Economic Forecasts
As the global energy shock rolls into its fourth week, revised growth and inflation forecasts are starting to trickle in. The trajectories are no surprise, but the numbers do highlight the tough position central bankers find themselves in.
Inflation and Growth Projections
"3% inflation is here to stay", say BNP Paribas economists, raising their 2026 U.S. core and headline forecasts to 3.2% and 3.3%, respectively. Goldman's economists reckon high oil and gas prices will add 1 percentage point to global headline inflation over the next year, and subtract 0.4pp from global GDP growth.
What Could Move Markets Tomorrow?
- Developments in the Middle East
- Energy market moves
- Global PMIs, including from Japan, UK, euro zone, U.S. (March, flash)
- Japan inflation (February)
- South Korea producer price inflation (February)
- Taiwan industrial production (February)
- ECB policymakers Pedro Machado, Olaf Sleijpen, Piero Cipollone and Philip Lane speak at separate events
- U.S. productivity (Q4, revised)
- U.S. Treasury sells $69 billion of two-year notes at auction
- U.S. Federal Reserve Governor Michael Barr speaks
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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)
