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Oil prices drop as US and Iran consider next steps. Equities are slightly higher.

Oil prices fell in a volatile session on Monday, as investors looked for signs of a possible solution to the Middle East conflict. The U.S. was also weighing the framework of an end-of-conflict plan with Iran.

The markets were closed for Easter Monday as well as Tomb Sweeping Day in many countries. But earlier that day, investors cheered up when Axios revealed that the U.S. and Iran, along with a group regional mediators, are discussing terms for a possible 45-day truce that could lead permanently to an end to the conflict, citing sources in the U.S. and Israel, and in the region who have knowledge of the discussions. The official IRNA news service reported on Monday that Iran had rejected the ceasefire, and stressed the need for a permanent ending to the war. In a social media post on Easter Sunday, U.S. president Donald Trump threatened Iran with "hell". He also said that if it didn't reopen the Strait of Hormuz by Tuesday, he would target Iran’s power plants and bridges.

The market is on edge and awaiting what will happen next. Robert Pavlik is a senior portfolio manager with Dakota Wealth, Fairfield, Connecticut. He said that until we reach a concrete agreement, it's difficult to commit to investing. I liken it going into the water about chest-deep. You are not committed fully, but you have made a commitment. Wall Street was at 10:52 am. ET (1452 GMT), the Dow Jones Industrial Average grew 73.57, or 0.13% to 46,564.03, while the S&P500 rose 11.72, or 0.18% to 6,594.44, and the Nasdaq Composite grew 57.35, or 0.24% to 21,932.08.

The MSCI index of global stocks rose by 1.94 points or 0.20% to 996.14.

Brent crude dropped to $108.74 a barrel, a?0.27% drop on the day, and U.S. Crude fell to $110.92 per barrel.

U.S. shares briefly lost some of their gains on Monday, after Institute for Supply Management figures showed that U.S. service sector growth had slowed down in March. Meanwhile, prices paid by companies for inputs rose to a near 3-1/2-year peak, an early indication that the war against Iran is causing inflationary pressures. The dollar index, which measures greenbacks against a basket including yen and euro, dropped 0.37% at 99.89. Meanwhile, the euro rose 0.33% to $1.1553.

The dollar gained 0.09% against the Japanese yen to reach 159.7. The yen flirted near the 160-dollar level on Friday after Japanese Finance Minister Satsukikatayama put currency traders on alert, saying that?the Japanese government is ready to take action against speculative movements in foreign exchange markets because volatility has increased "significantly."

Investors were torn between optimism about reports of a trucfire plan, and unease regarding Trump's threats to escalate attacks on Iran.

The yield on the benchmark U.S. 10 year notes fell by 1.3 basis point to 4.333% from 4.346% on Friday. Meanwhile, the yield on 30-year bonds dropped by 1.6 basis points.

The yield on the 2-year bond, which is usually in line with expectations of interest rates for?the Federal Reserve's, remained flat at 3.852% from 3.852% as late Friday. While Wall Street was closed on Good Friday for the holiday, Friday's U.S. Jobs Report showed that employment growth in March rebounded faster than expected, with the largest increase in over a year. As people left the workforce, the unemployment rate dropped to 4.3%. These data are confusing for the Federal Reserve. They will decide the next monetary policy in a two-day session ending on April 29, based on the new data. According to CME Group's Fedwatch, traders do not expect any rate cuts by the U.S. Central Bank until October 2027.

Wells Fargo's Investment Institute said that due to uncertainty about?inflation, and increased geopolitical risk tied to the Middle East conflict, it does not expect a Fed rate reduction in 2026. It had previously forecast two cuts for this year.

Silver and gold were both down, as the market awaited more signals about the U.S./Iran situation.

Spot gold increased by 0.1%, to $4.680.29 per ounce. Spot silver dropped by 0.37%, to $72.71 per ounce. (Reporting and editing by Lincoln Feast; Shri Navaratnam, Keith Weir, and Lincoln Feast)

(source: Reuters)