U.S. stocks surged on Monday, recouping all their losses from the ongoing conflict between the U.S., Israel, and Iran. Wall Street’s optimism about the global economy’s ability to avoid a worst-case scenario drove the S&P 500 up by one percent, coming within 1.3 percent of its previous record high. The Dow Jones Industrial Average also rose by 301 points (0.6 percent), while the Nasdaq composite saw a gain of 1.2 percent.
Meanwhile, in Canada, the S&P/TSX composite index climbed 183.48 points to reach 33,879.24. Despite oil prices briefly surpassing $100 US per barrel following unsuccessful ceasefire negotiations, they moderated throughout the day. The market experienced more subdued fluctuations compared to the extreme volatility witnessed since the conflict began in late February.
Following the breakdown in talks over the weekend, U.S. President Donald Trump threatened to blockade the Strait of Hormuz. This potential blockade could further disrupt global oil supply, exacerbating existing shortages caused by Iran’s restrictions in the crucial strait. Iran responded by issuing threats to all ports in the Persian Gulf and the Gulf of Oman.
Brent crude, the global benchmark, saw a 4.4 percent increase, settling at $99.36 US, significantly higher than its pre-war price of roughly $70 US. However, it remains below its peak of $119 US during heightened tensions in the past. Sameer Samana, head of global equities and real assets at Wells Fargo Investment Institute, noted that market sentiment was buoyed by ongoing dialogue and the current ceasefire.
As the earnings season kicked off, major U.S. corporations began reporting their first-quarter financial results. Positive earnings reports could potentially offset concerns surrounding the Strait of Hormuz, as stock prices often track corporate profitability trends in the long run.
In the bond market, Treasury yields edged lower as oil prices retreated from their earlier highs. The 10-year U.S. Treasury yield decreased to 4.29 percent from 4.31 percent at the end of the previous week. Overseas, stock indexes in Europe and Asia experienced declines, with Hong Kong’s Hang Seng and South Korea’s Kospi each dropping by 0.9 percent, marking significant losses in global markets.
