Stan Choe
Oil prices are climbing following the latest rise of tensions between the United States and Iran, but the moves are more modest than they were earlier in the war. US stocks, meanwhile, are giving back a bit of their record-breaking rally.
The S&P 500 slipped 0.4 per cent from its all-time high and is on track for just its second drop in 14 days after the United States seized an Iranian-flagged cargo vessel that it said had tried to evade its blockade of Iranian ports. The Dow Jones was down 109 points, or 0.2 per cent, in mid-afternoon trade, and the Nasdaq composite was 0.5 per cent lower.
The Australian sharemarket is set to edge higher, with futures at pointing to a rise of 9 points, or 0.1 per cent, at the open. The ASX added 0.1 per cent on Monday. The Australian dollar was trading at US71.78¢.
The price for a barrel of Brent crude oil, the international standard, climbed 5.4 per cent to $US95.28 on worries that Iran could keep petroleum pent up in the Persian Gulf if it continues to block tankers from exiting the Strait of Hormuz.
It’s a turnaround from the last trading day on Wall Street, when stocks soared and oil prices tumbled Friday after Iran said it was reopening the strait to commercial traffic. That enthusiasm vanished quickly after Iran closed the strait again Saturday following the US decision to press ahead with its blockade of Iranian ports.
The next big deadline is looming on Wednesday at 10am AEST, when a ceasefire agreement between the United States and Iran is scheduled to expire.
Still, oil prices remain well below the high points reached so far in the war. Brent crude’s price briefly got above $US119 per barrel when fears were at their highest. And the S&P 500 is still above where it was before the war.
The muted moves suggest investors still see a possibility of a US-Iranian agreement that could get oil flowing again from the Middle East to customers worldwide. It would be in both countries’ economic interests to end the war.
Companies with big fuel bills fell to some of Wall Street’s larger losses following the rise in crude’s cost, as they have through much of the war.
Norwegian Cruise Line Holdings dropped 4.3 per cent, and Carnival lost 1.4 per cent.
United Airlines slipped 2.7 per cent, and American Airlines fell 4.8 per cent after American said it’s not interested in a merger with United. Airline stocks had flown higher last week following a report saying United wanted to combine with its rival.
On the winning side of Wall Street was TopBuild, a distributor of insulation and building products, which jumped 18.3 per cent. QXO is buying it in a deal valued at roughly $17 billion.
QXO said the deal would make it the continent’s second-largest publicly traded building products distributor, and its stock fell 5 per cent.
One big reason the US stock market has been so strong recently is the big profits that US companies have been reporting for the first three months of 2026, as well as expectations for continued growth.
While reporting stronger profits for the latest quarter than analysts expected, several of the biggest US banks said recently that they see the US economy remaining resilient, particularly because of solid spending by US consumers.
“Despite geopolitical risks, the earnings recovery remains intact,” according to Morgan Stanley strategists led by Michael Wilson. It’s remained so solid that analysts have even raised their profit expectations since the war began for the spring of 2026.
Along with JPMorgan Chase, Bank of America and other big banks, about 10 per cent of companies in the S&P 500 have already reported their results for the start of 2026. Nearly nine out of 10 have delivered a bigger profit than analysts expected, according to FactSet.
If the rest of the companies in the index just match analysts’ expectations, overall earnings per share for S&P 500 companies will end up 13 per cent higher than a year earlier, according to FactSet.
That’s big because stock prices tend to follow the path of corporate profits over the long term. Other big companies scheduled to report their results this week include UnitedHealth Group on Tuesday, Tesla on Wednesday and Procter & Gamble on Friday.
In the bond market, Treasury yields mostly rose. The yield on the 10-year Treasury, which influences mortgage rates, inched up to 4.25 per cent from 4.24 per cent late Friday. The yield was at just 3.97 per cent in late February, before the war with Iran broke out.
In stock markets abroad, indexes fell in Europe following a better finish in Asia. Germany’s DAX lost 1.2 per cent, and Hong Kong’s Hang Seng added 0.8 per cent for two of the world’s bigger moves.
AP
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