Stocks in the U.S. surged on Monday, fully recovering from previous losses attributed to the conflict involving the U.S. and Israel with Iran. Wall Street expressed optimism that the global economy may steer clear of the worst-case scenario. The S&P 500 climbed by one percent, edging closer to its record high achieved earlier this year. Meanwhile, the Dow Jones Industrial Average saw a gain of 301 points, representing a 0.6 percent increase, and the Nasdaq composite rose by 1.2 percent.
In Canada, the S&P/TSX composite index also experienced a positive trend, rising by 183.48 points to reach 33,879.24. Despite oil prices surging above $100 US per barrel following unsuccessful ceasefire negotiations, the market saw a stabilization in prices as the day progressed. These movements were less dramatic compared to the volatile fluctuations witnessed since the conflict commenced in late February.
After the breakdown of talks over the weekend, U.S. President Donald Trump announced intentions to block the Strait of Hormuz. The potential blockade would further reduce the global oil supply, exacerbating price hikes caused by Iran’s restrictions on maritime traffic in the crucial strait. In response, Iran issued threats against all ports in the Persian Gulf and the Gulf of Oman.
The price of Brent crude, which serves as the international benchmark, saw a 4.4 percent increase, settling at $99.36 US. Although significantly higher than its pre-conflict value of around $70 US, it remained below the peak of $119 US observed during heightened tensions related to the Iran conflict. Market analysts like Sameer Samana, head of global equities and real assets at Wells Fargo Investment Institute, noted that the positive market sentiment stemmed from ongoing dialogue between the involved parties and the apparent stability of the broader ceasefire.
As major U.S. corporations disclose their first-quarter earnings, strong financial reports could alleviate concerns surrounding the impact of the Strait of Hormuz on the stock market. Corporate profits typically influence stock prices in the long run. In the bond market, Treasury yields dipped slightly as oil prices retreated from their morning highs. The 10-year U.S. Treasury yield decreased to 4.29 percent from 4.31 percent at the close of trading on Friday.
Internationally, stock indexes in Europe and Asia saw declines. Hong Kong’s Hang Seng and South Korea’s Kospi experienced notable drops of 0.9 percent each.