Oil jumps on Hormuz tensions, stocks mostly retreat / Photo: Michael HEIMAN - GETTY IMAGES NORTH AMERICA/AFP
Oil jumps on Hormuz tensions, stocks mostly retreat
US and European stocks reversed Monday as oil prices surged over fears hostilities could resume in the weeks-long Middle East war after Iran closed the Strait of Hormuz following its brief reopening.
Investors were on edge approaching the end of the US-Iran ceasefire, with Washington saying it will send a delegation to Pakistan for a new round of talks "soon" and Iran saying it had yet to decide whether to attend.
"The market mood is very different at the start of the week compared to Friday," said Kathleen Brooks, research director at trading group XTB.
Crude had plunged Friday after the Islamic republic said it would again allow ships to pass through the Strait of Hormuz, through which a fifth of global oil and liquefied natural gas usually passes.
But world oil prices bounced on Monday as Iran closed the waterway and said the US blockade and seizure of an Iranian cargo ship breached the two-week ceasefire.
"Renewed attacks on commercial vessels in the Strait of Hormuz increased fears of supply disruptions and raised the risk of a broader escalation in hostilities between the US and Iran," said Trade Nation analyst David Morrison.
"Uncertainty also remains over whether negotiations in Islamabad will proceed after Iran said it would not attend talks while the blockade remains in place," he added.
Wall Street's main stock indices dipped, with the S&P 500 and Nasdaq Composite edging down from record closes.
While US investors are wary over what happens next, "they are afraid to step aways from the market because we know that if a deal is announced, the market's going to go up very quickly," said Jack Ablin of Cresset Capital Management.
The losses were sharper in Europe. Frankfurt dropped 1.2 percent, Paris shed 1.1 percent and London gave up 0.6 percent.
That came after gains for Tokyo, Hong Kong and Shanghai.
"Asian shares rebounded as they were in catch-up mode, having missed the rally seen in the US and Europe on Friday," said AJ Bell investment director Russ Mould.
"European indices presented a truer picture of the market mood, with investor wariness and weariness amid the continuing tensions in the Middle East," he added before trading began in New York.
The blockade of Iranian ports has been a significant sticking point in negotiations between the two countries, with both accusing the other of ceasefire violations.
There has so far been only one negotiating session, held in Islamabad on April 11 that ended inconclusively, although groundwork for fresh talks continued afterwards.
Chris Weston at Pepperstone said traders were assessing "whether the ceasefire can be salvaged through this week’s diplomatic talks, with recalibration on the probability of military escalation".
"Without a comprehensive agreement on Iran’s nuclear program, the ceasefire remained fragile."
- Key figures around 2050 GMT -
West Texas Intermediate: UP 6.9 percent at $89.61 a barrel
Brent North Sea Crude: UP 5.6 percent at $95.48 a barrel
New York - Dow Jones: DOWN less than 0.1 percent at 49,442.56 (close)
New York - S&P 500: DOWN 0.2 percent at 7,109.14 (close)
New York - Nasdaq Composite: DOWN 0.3 percent at 24,404.39 (close)
London - FTSE 100: DOWN 0.6 percent at 10,609.08 (close)
Paris - CAC 40: DOWN 1.1 percent at 8,331.05 (close)
Frankfurt - DAX: DOWN 1.2 percent at 24,417.80 (close)
Tokyo - Nikkei 225: UP 0.6 percent at 58,824.89 (close)
Hong Kong - Hang Seng Index: UP 0.8 percent at 26,361.07 (close)
Shanghai - Composite: UP 0.7 percent at 4,082.13 (close)
Euro/dollar: UP at $1.1786 from $1.1765 on Friday
Pound/dollar: UP at $1.3535 from $1.3516
Dollar/yen: UP at 158.88 yen from 158.64 yen
Euro/pound: UP at 87.07 pence from 87.04 pence
burs-jmb/bgs
R.Santoro--MJ
