The stock market in the United States saw a strong rally on Monday, recovering from losses triggered by the conflict between the U.S. and Israel with Iran. Investors on Wall Street expressed optimism about the global economy’s resilience against the ongoing tensions. The S&P 500 surged by one percent, coming within 1.3 percent of its previous record high earlier this year. Similarly, the Dow Jones Industrial Average gained 301 points, or 0.6 percent, while the Nasdaq composite climbed by 1.2 percent.
In Canada, the S&P/TSX composite index rose by 183.48 points to reach 33,879.24. Despite the oil market experiencing a surge above $100 per barrel following unsuccessful ceasefire negotiations, prices moderated as the day progressed. This adjustment was less dramatic compared to the significant fluctuations witnessed since the conflict began in late February.
In response to the failed negotiations over the weekend, U.S. President Donald Trump threatened to block the Strait of Hormuz. Such a move would further restrict global oil supply, compounding the existing price hikes due to Iran’s disruptions in the crucial strait, a key transit point for oil from the Persian Gulf region to global markets. Iran retaliated by issuing threats against all ports in the Persian Gulf and the Gulf of Oman.
The price of Brent crude, the global benchmark, surged by 4.4 percent, settling at $99.36, significantly higher than the pre-war level of around $70. However, it remained below the peak of $119 recorded during heightened concerns about the conflict with Iran. Market sentiment was somewhat buoyed by ongoing talks between the conflicting parties and the apparent stability in the broader ceasefire agreement.
As major U.S. companies begin reporting their first-quarter earnings, strong financial results could help alleviate concerns stemming from the geopolitical tensions in the Strait of Hormuz. Corporate profits often influence stock prices in the long term, and positive earnings reports may reassure investors.
Amidst these developments, Treasury yields in the bond market dipped 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. Conversely, international stock markets experienced declines, with indexes in Europe and Asia registering losses. Hong Kong’s Hang Seng dropped by 0.9 percent, while South Korea’s Kospi also fell by the same percentage, among the notable losses globally.