Monday saw a swing in U.S. stock prices as oil prices continued to rise as the war with Iran continued. The S&P 500 fell 0.4 percent and widened its loss since the start of the war, falling 9.1 percent below the record set earlier this year. The Dow Jones Industrial Average added 49 points, or 0.1%, and the Nasdaq composite fell 0.7%.
Financial markets were characterized by extreme caution. The S&P 500’s initial gain of 0.9 percent was quickly erased, and it then oscillated lower. The price of a barrel of benchmark U.S. crude rose 3.3% to $102.88, while stock indexes rose in Europe but fell sharply in some Asian markets. After trading higher earlier in the day, Canada’s main S&P/TSX composite index ended in negative territory at 31,934.94, down 25.71 points, or 0.08%. According to IG Wealth Management vice-president of investment strategy Pierre-Benoît Gauthier, “It’s a strange little market where it seems like dip buyers are on strike.” In the last couple of crises we got, it was very short-lived and strong drops followed by strong rallies, but this one looks like it’s grinding a little.”
The mixed moves came after a flurry of warfighting over the weekend, including the Houthi rebels’ entry into the Yemeni conflict. None of it gave any clarity for the main questions weighing on financial markets: When will oil and natural gas resume their full flows from the Persian Gulf to customers worldwide, and will it be soon enough to prevent a brutal blast of inflation?
On his social media platform, President Donald Trump stated that “great progress has been made” with “A NEW, AND MORE REASONABLE, REGIME to end our Military Operations in Iran” shortly before the U.S. stock market opened for business on Monday. However, he also mentioned the possibility of “blowing up and completely obliterating” Iranian power plants in the event that a deal is not reached in a timely manner and that the Strait of Hormuz, which is an essential waterway for the flow of oil, is not opened immediately.
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