U.S. stock markets surged on Monday, erasing previous losses attributed to the conflict between the U.S. and Israel with Iran. Wall Street expressed optimism that the global economy could avoid a worst-case scenario. The S&P 500 climbed one percent, edging closer to its record high from earlier this year. The Dow Jones Industrial Average gained 301 points, or 0.6 percent, while the Nasdaq composite rose by 1.2 percent.
In Canada, the S&P/TSX composite index saw a rise of 183.48 points, reaching 33,879.24. Despite oil prices surpassing $100 US per barrel after ceasefire negotiations failed, the market saw a slight reduction in price hikes as the day progressed. These fluctuations were more moderate compared to the volatile swings witnessed since the conflict began in late February.
Following the unsuccessful weekend talks, U.S. President Donald Trump pledged to impose a blockade on the Strait of Hormuz. This move could further restrict oil supply globally, as Iran’s limitations on traffic in the crucial strait had already caused oil prices to surge. The threat from Iran to target all ports in the Persian Gulf and the Gulf of Oman added to the tension.
The price of Brent crude, the global benchmark, surged by 4.4 percent, settling at $99.36 US. Although this was significantly higher than the pre-war price of around $70 US, it remained below the peak of $119 US seen during heightened Iran war concerns. Market analysts noted that the ongoing dialogue between the involved parties and the maintenance of a broader ceasefire were providing some relief to investors.
In the corporate sector, U.S. companies are releasing their first-quarter earnings reports, which could potentially offset concerns related to the Strait of Hormuz. Corporate profits often influence stock prices in the long run. Treasury yields dipped slightly as oil prices retreated from their peak earlier in the day, with the 10-year U.S. Treasury yield dropping to 4.29 percent.
Global stock markets experienced declines, with indexes in Europe and Asia registering losses. Hong Kong’s Hang Seng and South Korea’s Kospi were among the major losers globally, both dropping by 0.9 percent.