Oil prices are back above $100 per barrel, and stock markets are falling worldwide Monday after 21 hours of ceasefire talks between the United States and Iran failed to end their war (all figures in U.S. dollars).
But the moves are more modest than many of the extreme swings that have rocked financial markets since the start of the war in late February. Analysts said that suggests Wall Street still hopes both sides will ultimately avoid a worst-case scenario for the global economy.
The S&P 500 slipped 0.3% and gave back only a bit of its gains from the prior week, which had built on hopes about the weekend’s U.S.-Iran talks. The Dow Jones Industrial Average was down 361 points, or 0.8%, as of 9:35 a.m. Eastern time, and the Nasdaq composite was 0.3% lower.
The moves were sharper in the oil market, where prices jumped roughly 7%. After the weekend’s talks failed, President Donald Trump threatened a blockade of the Strait of Hormuz, a move that raises the pressure on Iran by trying to prevent it from making money by selling oil.
A blockade would keep even more oil off the global market, after prices already jumped for everyone because of shortfalls due to Iran’s restrictions on traffic in the important strait. That narrow waterway is how much of the oil produced in the Persian Gulf area reaches customers worldwide.
Iran responded by threatening all ports in the Persian Gulf and the Gulf of Oman.
“Security in the Persian Gulf and the Sea of Oman is either for everyone or for NO ONE,” the Islamic Republic of Iran Broadcasting reported Monday. “NO PORT in the region will be safe,” according to a statement from the Iranian military and the Revolutionary Guards.
The price of Brent crude, the international standard, rose back toward $102 per barrel and is well above its roughly $70 price from before the war. But it remains below the $119 peak it’s touched at times when worries about the U.S.-Iran war have been at their heights.
“Markets are taking some encouragement from the fact that the two sides are talking and that the broader ceasefire seems to be holding, for now,” according to Sameer Samana, head of global equities and real assets at Wells Fargo Investment Institute.
And, as with so many pronouncements made so far in the U.S.-Iran war, much will depend on the details of the blockade and exactly what gets restricted.
“Not all blockades are created the same,” said Brian Jacobsen, chief economic strategist at Annex Wealth Management.
“The developments over the weekend might not be as negative for the markets as many fear.”
In the meantime, big U.S. companies are beginning to tell investors how much money they made during the first three months of the year.
Goldman Sachs, the investment bank, said it made $5.6 billion in profit during the quarter, more than investors expected. But financial analysts pointed to some potentially concerning signals underneath the surface, including lower revenue from the trading of fixed income, commodities and currencies. Its stock fell 3.8%.
JPMorgan Chase, Wells Fargo, Citigroup and Bank of America all report later this week, as do Johnson & Johnson, Netflix and PepsiCo.
In the bond market, Treasury yields held relatively steady. The yield on the 10-year Treasury edged up to 4.32% from 4.31% late Friday.
In stock markets abroad, indexes fell across much of Europe and Asia. Germany’s DAX lost 1%, and Hong Kong’s Hang Seng fell 0.9% for two of the world’s larger losses.
“The outcome of the talks was not really what people were hoping for, that’s for certain,” Neil Newman, Managing Director, Head of Strategy at Astris Advisory Japan, said in Hong Kong about the U.S.-Iran negotiations.
“As we stand here at the moment, it doesn’t look very nice. Certainly, the oil prices are a big concern.”
___
Yuri Kageyama, Matt Ott and Mayuko Ono contributed to this report.