Stocks fall, oil prices rise amid doubts over U.S.-Iran talks
U.S. stocks and bonds sold off and oil continued its weeklong upward trajectory Thursday morning, as optimism faded over possible peace talks or a ceasefire between the United States and Iran.
Thursday also marks 48 hours before President Donald Trump’s five-day pause on strikes against Iran’s power infrastructure expires.
In a social media post, Trump appeared to indicate that talks with the Iranian regime were not progressing. “The Iranian negotiators are very different and ‘strange,'” Trump wrote on Truth Social. “They better get serious soon, before it’s too late, because once that happens, there’s no going back, and it won’t be pretty!”
The price of US crude oil approached $95 per barrel, up more than 4.2%. International Brent crude rose 4.5% to over $107 a barrel. Since the start of the war, the price of American crude oil has increased by more than 40%. Since the start of the year, it has increased by more than 60%.
Home heating oil, a gauge of jet fuel prices, also rose 6% early Thursday.
“Several factors are responsible” for this rise in oil prices, wrote Jim Reid, global head of macro and thematic research at Deutsche Bank, in a note to clients. “Most importantly, Iran has continued to reject messages from the United States about some kind of agreement, raising questions about whether there is actually a way out of conflict in the days to come.”
“The market’s attention is quickly turning to the end of Trump’s five-day deadline starting Monday,” he wrote.
S&P 500 futures were pointing to losses of nearly 1% when the opening bell rang at 9:30 a.m. ET. Nasdaq 100 futures were down more than 1.1%, Dow futures were down about 400 points, and Russell 2000 futures were trailing a 1.5% decline.
The “de-escalation playbook” was suspended this morning, “with gesticulating headlines creating much noise and little clarity on actual progress on the ceasefire,” JPMorgan’s trading desk wrote in a note to clients.
“Markets generally sided with the U.S.’s intention to exit the ramp,” they wrote, but stocks retreated because “oil prices failed to hold below $100, which also put pressure on gold and rates,” they wrote.
Bonds were also sold, causing yields to rise. The yield on the 10-year U.S. Treasury note reached nearly 4.4%. The yield on 20 and 30 year bonds was approaching 5%.
Treasury yields, particularly for 10-year bonds, strongly influence consumer loan rates. As a result, mortgage rates rose from around 6% at the start of the war on February 28 to over 6.4% as of Thursday morning.
Asian stock indices started selling off overnight. China’s Shanghai Index and Hong Kong’s Hang Seng Index both fell 1%, while Korea’s Kospi Index slipped 3.2%.
Those indexes were also weighed down by sharp declines in shares of technology companies, including Samsung, after Google revealed a new, more efficient use of storage and memory systems for artificial intelligence.
Europe’s Stoxx 600 followed, and as of 8:40 a.m. ET it was trading down 1.2%. Leading stock indices in Germany, France, Italy and the United Kingdom fell 1%.
