Stocks in the U.S. surged on Monday, fully recovering from previous losses attributed to the conflict between the U.S., Israel, and Iran. Wall Street expressed optimism that a worst-case scenario for the global economy could still be averted. The S&P 500 climbed by one percent, nearing its early-year record high by just 1.3 percent. The Dow Jones Industrial Average rose by 301 points, or 0.6 percent, while the Nasdaq composite saw a 1.2 percent increase.
Meanwhile, the S&P/TSX composite index in Canada rose by 183.48 points to reach 33,879.24. Despite oil prices briefly exceeding $100 US per barrel following unsuccessful ceasefire negotiations, prices stabilized later in the day. These adjustments were more moderate compared to the significant market fluctuations experienced since the conflict began in late February.
After talks over the weekend failed, U.S. President Donald Trump announced plans to block the Strait of Hormuz. This move could further limit global oil supply, as Iran had already restricted traffic through the strait, a crucial route for oil transportation from the Persian Gulf region. In response, Iran threatened all ports in the Persian Gulf and the Gulf of Oman.
The price of Brent crude, the global benchmark, increased by 4.4 percent to settle at $99.36 US, significantly higher than its pre-conflict price of approximately $70 US. However, it remains below the peak of $119 US reached during prior peak tensions related to the Iran conflict. Sameer Samana, head of global equities and real assets at Wells Fargo Investment Institute, noted that market optimism stemmed from ongoing dialogue and the relatively stable ceasefire.
As major U.S. corporations begin reporting their first-quarter earnings, positive results could alleviate concerns related to the Strait of Hormuz, as stock performance often correlates with corporate profitability trends. Bond markets saw a slight decline in Treasury yields as oil prices retreated from their morning highs, with the 10-year U.S. Treasury yield dropping to 4.29 percent from 4.31 percent on Friday.
In international markets, stocks in Europe and Asia experienced declines. Hong Kong’s Hang Seng dropped by 0.9 percent, and South Korea’s Kospi also fell by the same percentage, marking significant losses in two major global markets.
