U.S. stocks and bonds sold off and oil continued its weeks long upward trajectory Thursday morning, as optimism faded about possible peace talks or a U.S.-Iran ceasefire.
Thursday also marks 48 hours until the expiration of President Donald Trump’s 5-day pause on strikes against Iran’s power infrastructure.
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 is too late, because once that happens, there is no turning back, and it won’t be pretty! »
The price of U.S. crude oil approached $95 per barrel, up more than 4.2%. International Brent crude rose 4.5%, to more than $107 per barrel. Since the war started, the cost of U.S. crude oil is up more than 40%. Since the start of the year it has risen more than 60%.
Heating oil, a proxy for jet fuel prices, also spiked 6% early Thursday.
« Several factors are responsible » for this jump in oil prices, wrote Jim Reid, Deutsche Bank’s global head of macro and thematic research, in a note to clients. « A big one is that Iran has continued to reject the messages from the U.S. about some kind of deal, raising questions about whether there is really an off-ramp to the conflict in the days ahead. »
« Market attention is quickly turning to the end of Trump’s 5-day deadline from Monday, » he wrote.
S&P 500 futures pointed to losses of nearly 1% when the opening bell rings at 9:30 a.m. ET. Nasdaq 100 futures indicated they would fall more than 1.1%, Dow futures showed were down about 400 points and Russell 2000 futures were tracking a drop of 1.5%.
The « de-escalation playbook » was put on hold this morning, « with posturing headlines creating a lot of noise and little clarity on actual ceasefire progress, » JPMorgan’s trading desk wrote in a note to clients.
« Markets have generally sided with the U.S.’ intent to off-ramp, » they wrote, but stocks pulled back because « oil prices failed to hold below $100, also pressuring gold and rates, » they wrote.
Bonds also sold off, driving yields higher. The 10-year U.S. Treasury bond yield rose to nearly 4.4%. The yield on the 20 and 30-year bonds approached 5%.
Treasury yields, especially for the 10-year bond, heavily influence consumer lending rates. As a result, mortgage rates have risen from around 6% at the start of the war on Feb. 28 to more than 6.4%, as of early Thursday.
Stock indexes in Asia had begun to sell-off overnight. China’s Shanghai index and Hong Kong’s Hang Seng index both fell 1%, while Korea’s Kospi slid 3.2%.
These indexes were also weighed down by big drops in shares of tech companies, including Samsung, after Google revealed a new, more efficient use of storage and memory systems for artificial intelligence.
The Stoxx 600 in Europe followed, and as of 8:40 a.m. ET it was trading lower by 1.2%. Flagship stock indexes in Germany, France, Italy, and the U.K. tumbled 1%.
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