By Mike Dolan
April 14 –
What matters in U.S. and global markets today
By Mike Dolan, Editor-at-Large, Finance and Markets
Markets are clinging to hopes that there will be an eventual breakthrough in U.S.-Iran negotiations, with oil prices retreating and stocks rebounding even as the U.S. blockade of Iranian ports takes effect.
The half-hearted stock selloff early on Monday, which later unwound, indicated that the impact of each twist and turn in the conflict appears to be dissipating, with investors sticking to the view that we’ll soon see significant de-escalation and a freeing up of oil supplies.
I’ll get into that and more below.
But first, check out my latest column on why Hungary’s political shift could have big implications for EU assets.
And listen to the latest episode of the Morning Bid daily podcast, where I discuss the S&P 500’s return – just about – to its pre-war level.
Finally, don’t forget to mark April 23 in your calendar, when I’ll be joining my ROI colleague Jamie McGeever for a timely webinar discussion on rethinking safe-haven assets in uncertain times. Sign up here.
WAR-WEARY MARKETS FILTER OUT NOISE
Despite the imposition of the U.S. blockade and hard talk between Washington and Tehran, reports over the past 24 hours have suggested there is still some dialogue between them and that talks could resume this week.
That’s been enough to guide Brent and WTI crude back below $100 per barrel. Oil’s retreat helped spark a rally on Wall Street on Monday, with the S&P 500 ending up about 1%, leaving it higher than it was at the outbreak of the war more than six weeks ago.
That momentum has so far carried on into Tuesday, with Asian stock indexes closing in the green, European shares rising, and Wall Street futures ticking up. The dollar index fell to its lowest point in a month-and-a-half on the upturn in risk sentiment.
Turning to corporate news, earnings season is well and truly underway as traders await more updates from the big U.S. banks today. Goldman Sachs, which reported on Monday, stumbled in fixed income and currency trading during the quarter, pushing its shares down despite headline results beating estimates.
JPMorgan, Citi, and Wells Fargo are up next in what’s expected to be another impressive corporate scorecard, despite the oil shock at the end of the quarter.
The IMF, meantime, will have the unenviable task today of releasing its forecasts for the world economy for this year. Both it and the World Bank have already signaled they will downgrade their global growth projections and raise their inflation predictions because of the war.
On the U.S. macro front, existing home sales fell to a nine-month low in March, pushed down by a lackluster labor market and stumbling household purchasing power and wealth. The outlook for the year appears less than stellar as mortgage rates rise amid the Iran war.
Elsewhere, China’s exports fell in March as the Iran war appeared to hamper AI-driven tech demand. Outbound shipments grew by just 2.5%, a five-month low, and far below the 21.8% surge seen in February. Economists polled by Reuters had forecast growth of 8.3%.
Chart of the day
Goldman Sachs beat expectations for quarterly profit on Monday, driven by strength in dealmaking and equities trading, but the U.S. investment bank’s shares fell 2% on weakness in fixed income markets, interest rate trading, mortgages and credit. The bank’s revenue hit $17.2 billion, however, its highest three-month tally since a record of $17.7 billion in Q1 2021.
Today’s events to watch
* U.S. March PPI (8:30 a.m. EDT)
* U.S. 12-month bill auction (11:30 a.m. EDT)
* Fed’s Michael Barr, Boston Fed’s Susan Collins, Richmond Fed’s Thomas Barkin, and Philadelphia Fed’s Anna Paulson all speak
* U.S. corporate earnings: JPMorgan, Citigroup, Wells Fargo
* IMF publishes its latest World Economic Outlook (9 a.m. EDT)
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(By Mike Dolan)
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