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The US stock market is worried about the rising oil prices
U.S. investors are apprehensive about the sudden rise in oil prices, which could cause an economic shock and further damage to equities. Investors continue to gauge the economic and market impact of the U.S. - Israeli war on Iran. Michael Reynolds, Glenmede's vice-president for investment strategy, said that the news was a "shock". It's a surprise, and both investors and the public are trying to understand what this means as it unfolds. The Federal Reserve may be hesitant to lower interest rates if the Federal Reserve is concerned about rising inflation. Higher gas and oil prices will increase costs for energy-intensive businesses, reduce discretionary budgets and erode consumer discretionary spending. Oil and stock prices dropped sharply on Monday after President Donald Trump told CBS News that his war against Iran was "very completed." Investors said that as they assessed the possible end of the conflict, they would be watching to see what Iran and Israel will do and how much energy will flow through the Strait of Hormuz. This is a crucial chokepoint. MARKET CORRECTION ?OR WORSE? Reynolds and other investors are scrambling for scenarios in the event that oil reaches heights not expected just days ago. Investors have pointed out that U.S. crude and Brent crude both broke over $100 a barrel on Monday, a level which could cause more stock turbulence. The commodities reached a high of $120 at one time on Monday, but ended lower than $100. U.S. oil was trading at $83 per barrel after Trump's remarks. U.S. crude was settled at $67.02 on February 27, which was the last session prior to the U.S. and Israeli strikes. Stock?volatility is on the rise. On Monday, the Cboe Volatility Index topped 30 for nearly a full year. It was below 20 at the end of February. The declines in U.S. stock prices have been modest compared to those of other regions. However, the S&P 500 benchmark was down 2.6% since its all-time high late January. Major equity indices finished higher on Monday, after falling steeply earlier in session. Yardeni Research strategists said on Tuesday that they were expecting a 10% correction in the stock market. In a note published on Sunday, the firm stated that "we can't exclude a bear market and even a possible recession." OIL AND STOCKS - A Tighter Link Oil prices are on the rise, and the movements have become more closely linked to the stock exchange. According to LSEG, the 20-day correlation of S&P 500 with U.S. Crude stood at -0.813 on Monday morning. This is a strong inverse relation that indicates they tend to move in opposite direction. In a Monday note, Deutsche Bank strategists were assessing whether the Iran situation would prompt a greater risk-off movement. They said that the oil shock was "among the most serious in history," and that investors have priced in "a shorter rather than a protracted conflict." Stock investors, who typically think of oil and stocks as two separate markets, have historically followed oil's price trajectory closely, particularly after extreme price movements. A jump in oil prices over $120 per barrel in early 2022 coincided with a decline in stock values. Stock investors were concerned in 2015-2016 that the low price of U.S. Crude Oil, which dropped below $30 per barrel, was a sign for a general economic slowdown. Pain at the Pump for Consumers The focus is once again on the economic implications of rising oil costs. According to JPMorgan's economists, each 10% increase in oil prices will translate into a drag of 15 to 20 basis points on the GDP growth. The JPMorgan economists stated in a recent note that the effects could also be non-linear. Higher oil prices spikes would result in an even greater hit to the growth. JPMorgan economists, along with other analysts, warned that the economic impact would depend on how high crude prices remain. The price of gasoline is currently rising due to the increase in crude oil. According to AAA, the national average price of gasoline increased to $3.48 a gallon Monday from $2.902 one month earlier. The?group reported that this is the highest price since summer 2024. Kevin Gordon, Charles Schwab's head of macro-research and strategy, said that oil prices were "as visceral" as filling your gas tank. In fact, the shares of companies that are most dependent on discretionary expenditures could be among those most susceptible to rising oil prices. Morningstar says that fuel costs account for 20 to 25 percent of airline unit costs. The S&P 1500 index for passenger airlines is down by about 11% since the war began. One HEADLINE away from a Reversal? Investors are cautious about the future, as Monday's events?underlined. Larry Adam, Chief Investment Officer at Raymond James Wealth Management, said in a Monday note that the firm anticipates the conflict will be "relatively brief." The firm kept its price forecast for U.S. Crude at $55 to $60 per barrel by the end of the year. Investors also keep in mind how Trump changed his stance on policies that are market-sensitive during his tenure. It was the softening of Trump's blanket "Liberation Day", tariff policies in April last year that led to a sharp rise in asset prices. Gordon stated that "we're just one headline away from this all reversing aggressively in a very aggressive manner." (Reporting and editing by Colin Barr; Additional reporting by Chuck Mikolajczak, Siddharth Cavale, and Lewis Krauskopf)
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Livestock-CME cattle prices fall amid inflation fears and crude oil surge
Chicago Mercantile Exchange feeder cattle and live cattle futures declined?on Monday, as rising gasoline and a'stock market decline' stoked broader concerns and fueled fears about?consumer expenditure on beef. Managed funds exited their long positions for the?second straight day and technical selling has accelerated the decline of the market as actively traded contracts have fallen below recent lows, and broken through key technical chart resistance levels. The feeder cattle market was further impacted by the high feed corn prices. Since the U.S. President Donald Trump, and his allies in Israel, attacked Iran over a week ago, the markets, including commodities, are roiled by hostilities. This has disrupted crude oil production, shipping, and prices across the region, sending them to highs that have not been seen since 2022. Equities markets were near multi-month lows for most of the day. Mike Zuzolo is the president of Global Commodity Analytics. He said, "The cattle have taken a hit because of the corn rally, and Wall Street's weakness. The feeders are the ones who have suffered the most." The late-session drop in crude oil and the stock market's rebound was too late to affect cattle markets. CME April Live Cattle ended at 230.150 Cents per Pound, a 4.425-cent decrease after reaching their lowest level since mid December. April feeders settled at 346.550cents per pound after touching limit-down, a 5.075-cents decline on the day. Beef packers are acquiring cattle for lower prices, but their margins still remain negative. According to the U.S. Department of Agriculture, wholesale beef prices have risen as a result of 'pared-back production. According to HedgersEdge, an advisory service for livestock marketing, the average beef packer's margin was estimated as a negative $117.95 a head on Monday. This compares with losses of $200 per head one week ago. Lean hog futures declined on Monday as spillover pressure due to lower cattle prices outweighed support from strong pork demand. CME April hogs ended 0.800 cents lower at 95.825 cents per kilogram. (Reporting and editing by Shilpi Mahumdar; Reporting by Karl Plume)
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Kremlin: In a telephone call with Trump Putin shares his proposals for ending the Iran War quickly
Yuri Ushakov, a Kremlin adviser on foreign policy, said that Russian 'President Vladimir Putin', during a phone conversation with Donald Trump of the United States, made a number of proposals to a halt the conflict involving Iran. Ushakov told reporters that the two leaders discussed the conflict in Ukraine, and that the Russian gains should prompt Kyiv's negotiating team to work towards a resolution. He called the whole?discussion "very substantial", and added that it "would likely have practical implications for future work between the two countries". Ushakov stated that Putin "expressed a number of thoughts aimed at ending the Iranian conflict quickly, both politically and diplomatically, including contacts with leaders of Gulf States, the President of Iran, and other leaders". He said Trump had "offered his opinion on the developments in U.S. Israeli operations." I can say with certainty that there was a substantial exchange of ideas. Ushakov stated that Trump believes it is in the U.S.'s interest to see "a rapid end to the conflict in Ukraine, with a ceasefire and long-term solution". He said that "Russian troops are advancing very successfully" in Ukraine. As was noted, this 'factor' should encourage the regime in Kyiv - to negotiate a solution - to the conflict. Ushakov said that the two presidents discussed the Venezuelan situation within the context of the global oil markets. (Reporting and writing by Dmitry Antonov, editing by Ron Popeski and Alistair Bell).
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After Trump's hint at ending the Iran war, shares rise and oil prices fall
Wall Street stocks rose, oil prices remained steady and U.S. Treasury Yields fell on Monday. President Donald Trump reportedly stated that he believes the war against Iran is "very complete" and the 'U.S. It is "very much ahead" of the initial estimate of four to five weeks. The initial fall in stock and bond prices was due to the surging oil price, which seemed to be a sign that inflation would spread around the world. This led central banks to increase interest rates. Saudi Arabia, along with other OPEC countries, cut oil supplies to counter the U.S. - Israel war against Iran. Oil prices soared as high as 29% in the session. Prices fell from their session highs after the U.S., and other Group of Seven countries (G7) considered tapping into strategic petroleum reserves in order to reduce inflation pressures caused by energy price increases. After settlement, U.S. Crude fell 5.32%, to around $86 per barrel. Brent dropped to $90, a drop of 2.65%. Wall Street stocks recovered from initial losses to end higher. The Dow Jones Industrial Average rose 0.6%, S&P 500 climbed 0.8% and Nasdaq Composite soared 1.3%. The gains came despite Iran’s hardliners staging a show on Monday to declare their loyalty to the new Supreme Leader Mojtaba Khmenei. His rise seemed to have dashed hopes of a quick end to the war in the Middle East, which was causing havoc to global markets. EUROPEAN AND ASIAN SHARE PRICES DROP European shares have fallen to their lowest level in over two months. The pan-European Stoxx 600 has lost 0.6% for the third consecutive session. The benchmark index lost 5.5% in the past week, which was its worst performance since nearly a full year. Oil price spikes were a sobering experience for Asian oil importers. Japan's Nikkei closed down 5.2%, after a drop of 5.5%. China, a major oil importer with a large stockpile, saw its blue chip index drop by about 1%. China said on Monday that inflation was already up in February, before the current oil boom, and consumer prices rose 1.3% year-on-year. This is not necessarily a bad development, as the country has struggled for years with deflation. Lisa Shalett is the chief investment officer of Morgan Stanley Wealth Management. She wrote earlier in the day that, although the U.S. stock market may appear calm, there are still "extreme" rotations taking place and dispersions of stocks below the surface. Shalett wrote that "war-induced oil scares" have not been kind to the stock market in 80 years. Nearly every episode has triggered a recession or a selloff of the markets. Central Banks Face Inflation Conundrum U.S. Treasury Yields have pulled back after Monday's initial rise, as oil prices have slowed. The yield for the two-year bond was down by 0.4 basis points to 3.552%. It had earlier reached 3.635%, its highest level since November 20. The benchmark U.S. 10 year note yield dropped 3 basis points to 4,102%, after trading earlier at 4.216%. Fed funds futures now price in 77% of the odds that rates will be cut in July. This is up from 67% on Monday. They also fully price in a rate reduction in September. The U.S. Dollar was barely changed against the yen and euro after both gained earlier on Monday as a flight to security. Spot gold dropped 0.53%, to $5,142.37 per ounce. Bitcoin gained almost 3%, to $69154. (Reporting and editing by Thomas Derpinghaus; Bernadette Baum and Susan Fenton; Will Dunham, David Gregorio and Will Dunham)
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Brazil's farmers are facing a rise in diesel prices as a result of the Middle East conflict.
The first and most immediate impact of the U.S.-Israeli attack on Iran is a spike in diesel prices. This will increase costs for Brazilian farmers harvesting record soybean crops?and planting corn that they can't afford to delay. Brazil imports around 30% of its diesel needs. This leaves farmers vulnerable as fuel prices rise along with global oil costs, said representatives from major agricultural groups. The conflict occurs at a time when the demand for diesel in Brazil is at an all-time high. Farmers are harvesting the remaining fields, hauling soybeans for market and finishing the planting of 'the second corn crop', which is the majority of corn produced in Brazil. Brazil is one of the world's biggest soybean exporters and corn suppliers, so any disruption in farm operations will have a significant impact on global grain markets. Officials from the industry said that these activities, as well as other fieldwork, such applying pesticides and fertilizers, are dependent on diesel. Diesel is currently the most important issue. "We saw oil moving from around $80 per barrel to $100 per barrel range and that has caused alarm among the countryside," Bruno Lucchi said, technical director of farm lobby CNA. On Monday, oil prices rose above $119 per barrel before falling back. Brent crude had risen by more than 7% at 2 pm local time and was trading close to $100 per barrel. Petrobras - which supplies the majority of the market - hasn't yet altered its prices, but you can already feel it. Some suppliers have allegedly restricted sales due to higher oil costs, causing problems for farmers in Rio Grande do Sul. Lucchi said that higher costs - or disruptions in -nitrogen fertilizer imported from Iran due to risks on the Strait of Hormuz - were manageable at this time because farmers already had supplies?for current season, and could delay any new purchases. Diesel is a more immediate problem. Cleiton Gauer, director at Mato Grosso's farm economy institute Imea said that producers needed fuel immediately to keep the fieldwork moving. Diesel and lubricants account for about 5% of farm costs, according to Gauer. Lucchi said he received reports that the price of gasoline had risen by as much as 1.5 reais per liter in some areas, especially those located in Brazil's southern and center-west regions. (Reporting and writing by Roberto Samora, Kylie Madry, Aurora Ellis).
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Edison Utility wins shareholder lawsuit against LA wildfires
The parent company of Southern California Edison, which is based in Los Angeles, won the dismissal of a lawsuit that alleged 'it defrauded shareholders prior to wildfires in the Los Angeles area on January 2025 by claiming it had reduced the risk of loss from such catastrophes. Edison International was accused by shareholders of being "structurally incapable" to deal with extreme weather and implement the Public Safety Power Shutoff Program, which is a last resort measure to shut down powerlines when fire risk becomes too high. Shareholders also claimed Edison "falsely" promised that the program along with hardening electricity lines and trimming vegetation could reduce wildfire risks by as much as 90 percent. Edison's stock price dropped by around one third within a month after the wildfires. In a decision issued on Friday, U.S. district judge Otis Wright of Los Angeles stated that Edison's statements regarding its power-shutoff program are too vague to be relied upon, and that shareholders have not shown Edison's promise to reduce wildfire risks everywhere it serves. Wright wrote: "The PSPS statements are not perfect, even if they're read with a charitable eye for the plaintiffs." It would be illogical for a reasonable investor to assume SCE can use PSPS across all 38 transmission lines without an affirmation of complete or perfect loss-reduction. The judge said that shareholders can re-file their claims for?risk reduction. The lawyers for the shareholders have not responded to our request for comment on Monday. David Eisenhauer is a spokesperson from Rosemead-based Edison. He said: "We are in agreement with the court's ruling and remain committed to wildfire mitigation by grid hardening and situational awareness, as well as enhanced operational practices." The wildfires of January 2025 killed 31 people, destroyed or damaged over 16,000 buildings. Much of the damage was caused by the Eaton Fire in Altadena and Palisades Fire in Pacific Palisades. The U.S. Government sued Southern California Edison in September for causing the Eaton Fire to start and destroying National Forest System land.
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The US stock market is worried about the rising oil prices
The sudden surge of oil prices to above $100 per barrel has rattled U.S. investors. They are preparing for a sharper increase in energy costs that could further harm equities and stymie the economy. Investors continue to gauge the economic and market impact of the recent attacks on Iran. The U.S. oil price has risen by 50% to its highest level for more than three-years. Michael Reynolds, Glenmede's vice president of investment strategies, said: "It is a shock." "It is out of left-field, and people are trying to understand what it means as it unfolds." The Federal Reserve may be hesitant to lower interest rates if the Federal Reserve is concerned about rising inflation. Higher gas and oil prices will increase costs for energy-intensive businesses, reduce discretionary budgets and erode consumer discretionary spending. MARKET CORRECTION OR WORSE? Reynolds and other investors scrambled to come up with scenarios in case oil reached heights not expected just a few days before. Investors have noted that U.S. crude and Brent crude both broke through $100 a barrel on Monday. This level could cause more stock turbulence. At one point on Monday, the commodities were close to $120. U.S. crude oil settled at $67.02 in the last session of the U.S. - Israel strikes on February 27. Stock volatility has also risen. On Monday, the Cboe Volatility Index topped 30 for nearly a full year. It was below 20 in late February. The S&P 500 benchmark was down nearly 4% since its all-time high in late January, after paring earlier steeper declines in Monday's trading session. Last Tuesday, strategists at Yardeni Research predicted a 10% correction in the stock market. In a Sunday note, the firm stated that "we can't rule out" a bear-market and even a possible recession. OIL AND STOCKS - A Tighter Link Oil prices are rising and the movements have become more closely linked to the stock market. According to LSEG, the 20-day correlation of S&P 500 with U.S. Crude stood at -0.813 on Monday morning. This is a strong inverse relation that shows a tendency to move 'in opposite directions. The strategists at Deutsche Bank, who are watching to see if the Iran situation will?prompt an even larger risk-off movement, stated in a Monday note that the oil shock is "among the most serious in history," however, investors have priced in a "short rather than a protracted conflict." Stock investors, who typically think of oil and stocks as two separate markets, have historically followed oil's price trajectory closely, particularly after extreme price movements. Stock prices fell in early 2022 after oil prices jumped to $120 per barrel. This was due to the outbreak of conflict in Ukraine. Stock investors were concerned in 2015-2016 that the low price of U.S. Crude Oil, which dropped below $30 per barrel, was a sign for a general economic slowdown. Pain at the Pump for Consumers The focus is once again on the economic implications of rising oil costs. According to JPMorgan's economists, each 10% increase in oil prices will translate into a drag of 15 to 20 basis points on the GDP growth. The JPMorgan economists stated in a recent note that the effects could also be non-linear. Higher oil prices spikes would result in an even greater hit to growth. JPMorgan's economists and analysts warned that the economic impact would likely depend on how high crude prices remain. Currently, crude oil prices are rising. According to AAA, the national average price of gasoline increased to $3.48 a gallon Monday. It was $2.902 per gallon a month earlier. The group stated that this is "the highest level seen since summer 2024". Kevin Gordon, Charles Schwab's head of macro-research and strategy, said that oil prices were "as visceral" as filling your gas tank. In fact, the shares of companies that are most dependent on discretionary expenditures could be among those most susceptible to rising oil prices. Morningstar says that fuel costs for airlines account for 20 to 25 percent of their unit costs. The S&P 1500 index for passenger airlines is down 15 percent since the war began. One HEADLINE away from a Reversal? Higher oil prices can benefit certain parts of the market. Since late February, the S&P 500's energy sector has gained 1% while the broader S&P 500 fell over 2%. Some investors are concerned that the situation can change at any time. Raymond James Chief Investment Office Larry Adam stated in a?note on Monday that the firm expects the conflict will be "relatively brief." The firm's price target for U.S. Crude at the end of the year was $55 to $60 per barrel. Investors also pay attention to how Donald Trump, the U.S. president has shifted course in his tenure on policies that are market-sensitive. His softening of the blanket "Liberation Day", tariff policies in April last year was a major factor that led to a rapid rebound in asset prices. Gordon stated that "we're just one ceasefire agreement headline from this all reversing aggressively," (Reporting and editing by Colin Barr; Additional reporting by Chuck Mikolajczak, Siddharth Cavale and Lewis Krauskopf)
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How could Trump combat the rise in oil prices?
U.S. president Donald Trump will review a number of options as soon as Monday to tame the oil prices. They have soared since 2022 due to the U.S. and Israel?war against Iran. Some options could spark domestic and international opposition. The stakes are very high. The stakes are high. Here are some options that?Trump? could choose from: SALE OF OIL FROM STRATEGIC OIL RESOURCES Trump can order the sale of oil in the U.S. Strategic Petroleum Reserve, and coordinate with partners and allies on a worldwide release. The goal would be to lower prices by increasing the supply. SPR in the U.S. currently has more than 415,000,000 barrels. This is more than four full days of oil consumption worldwide. The SPR is at its lowest since the mid-1980s, after Trump's predecessor Joe Biden sold more than 200,000,000 barrels of oil in 2022, when Russia invaded Ukraine. Fatih Birol, the head of the International Energy Agency (IEA), told G7 Finance Ministers on Monday that IEA member countries hold over 1.2 billion barrels in public emergency oil reserves and a 'further 600,000,000 barrels are industry stocks under government obligation. The IEA has called for a coordinated oil release, and the G7 nations have agreed to closely monitor energy market developments. There has been no release yet. In the Strait of Hormuz, what is the insurance for a tanker? Around 20% of daily world oil consumption transits the Strait of Hormuz, off the coast of Iran. Marine insurers have cancelled war risk coverage due to the conflict, which has led to a halt in most tanker traffic. The U.S. announced on Friday that it would offer up to $20 billion of reinsurance to tankers who have anchored in the narrow waterway. Analysts say that the plan is limited in its ability to solve the problem. JPMorgan Chase analysts have said that the insurance programs are far too small. They estimate the need to be about $352 billion. The administration has claimed the analysis was flawed. Analysts say that ship owners are more concerned about the real security risks. Shipping officials say they don't expect to see a large-scale return of oil flows in the Strait until after the war. TAX HOLIDAY Waiving federal taxes could help reduce the price of gasoline. The U.S. government charges 18.4 cents for each gallon, and more for diesel. The full amount would save a little more than 5% on the average national retail price for gasoline, which is $3.48. This move will also reduce funding for the Federal Highway Trust Fund, which pays highway maintenance and mass transportation. WAVE RULES ON FUELS The U.S. may temporarily suspend the pollution regulations on fuels that add to the price of gasoline. Pump prices may fall if refiners pass on the savings. Refiners in the United States are preparing to produce summer-grade gas and other fuels, which produce less pollution during warm weather. These blends cost more to produce but the savings from a relaxation of rules will be modest. In 2024, a U.S. Energy Information Administration report suggested that refinery restrictions tied to summer gas production could cause retail prices to rise by around 10 cents per gallon in tight market conditions. The communities that are concerned about the effects of more pollution-causing gas formulations may be enraged by the easing of the pollution regulations. EXPORT RESTRAINTS The White House may impose restrictions or a ban on U.S. crude oil exports and other fuels, such as gasoline, in an effort to lower prices for consumers at home. Top energy industry groups have opposed such a?move in times of energy shortages, like after Russia's invasion in Ukraine in 2022. Biden didn't impose these restrictions. A similar move is not clear. The U.S., the world's biggest oil producer and net exporter, is not equipped to refine U.S. crude grade. This means that they will still have to import it from abroad. ELIMINATE SANCTIONS on more Russian oil U.S. Treasury secretary?Scott Bessent stated on Friday that the U.S. may ease further sanctions related to Ukraine on Russian oil in order to increase global supply. His comments came just a day after Washington granted India a 30-day waiver to allow it to purchase Russian crude oil currently stranded on the sea. If done long-term, it could be criticized for helping Russia fight Ukraine. WAIVE THE JONES ACT The Trump?administration may temporarily waive the Jones Act. This law requires that all cargo transported between U.S. ports be carried by tankers made in America using unionized labor. The law's repeal could allow companies to have more flexibility when transporting oil from the Middle East to U.S. coast refineries. This includes being able to hire cheaper ships without unionized labor. The law is more than 100 years old and has broad support from unions across the country. This could make it politically sensitive. Futures Market A White House official revealed last week that the U.S. had considered trying to control oil prices via financial markets, such as futures contracts. There were few details on how this would work.
US considers easing Russian oil sanction to cool global prices surge, sources claim
According to sources familiar with Trump's plans, the administration may reduce oil sanctions on Russia in order to cool the surge in global energy prices caused by the U.S. and Israeli war against Iran. An announcement could be made as early as Monday.
The U.S. would like to increase world oil supplies amid the'massive disruptions in Middle East shipments due to the expanding conflict. But this could also complicate its efforts to deny Russia revenue from its war in Ukraine.
Sources who spoke on condition of anonymity said that the discussions could include a broad relief of sanctions as well as more 'targeted' options which would allow certain countries such as India to purchase 'Russian oil' without fear of U.S. tariffs or penalties.
Last week, the United States allowed India to temporarily buy Russian crude oil that was already on tankers in the sea to help it cope with Middle East supply cuts.
Sources said that the new measures could be announced as early as Monday.
Taylor Rogers, White House spokesperson and a spokesperson for the 'administration,' called the war Operation Epic Fury.
Rogers stated that "any policy announcements will be made directly by the President or his staff."
(source: Reuters)