MARKET WRAPS
European shares fell sharply while oil climbed again on Monday following failed talks between the U.S. and Iran over the weekend.
Trump said he doesn't care whether Iran returns for another round of negotiations. He also confirmed that a U.S. blockade on ships entering or exiting Iranian ports would take effect Monday at 10 a.m. ET.
Oil stocks gained while airline shares lost ground as oil again surpassed $100 per barrel.
"Despite last week's optimism when the two-week ceasefire was announced, the mood has shifted negatively once again ," Deutsche Bank said, pointing to the oil price rise. "And in turn, that's revived fears about a stagflationary shock, with equities and bonds losing ground around the world."
Phillip Nova said oil markets are back to watching geopolitics.
"The market reaction underscores a simple but powerful reality: Hormuz risk is not theoretical; it is structural , and it is real," it added.
Markets are also watching China closely , given its reliance on Iranian crude imports.
Saxo Markets said the U.S.'s blockade of the Strait of Hormuz isn't a complete closure but an attempt to challenge Iran's use of the chokepoint as a source of economic and strategic leverage.
Even without a full resumption of war, crude oil is likely to stay supported as long as the strait remains a point of confrontation. "If oil remains elevated, markets may have to scale back some of the more optimistic expectations around rate cuts," it added.
Economic Insight
The European Central Bank will publish the accounts of its March policy meeting on Thursday, potentially adding further considerations on its thinking about inflation and growth risks stemming from the Middle East war.
Investors will also be watching final inflation data for March due from Spain on Tuesday, France on Wednesday, Italy and the eurozone on Thursday.
U.S. Markets:
Stock futures fell on Monday on Trump's vow to blockade the Strait of Hormuz.
Investors now await producer-price data for March due Tuesday for clues on how the war in the Middle East and the consequent spike in energy prices have fed through into pipeline inflationary pressures. It comes after data showed U.S. annual consumer price inflation rose sharply to 3.3% last month.
Forex:
The euro fell. The currency's subdued fall in response to the collapsed U.S.-Iran peace talks partly reflects some relief over no immediate renewed assault on energy infrastructure in the region, ING said.
The Hungarian forint traded near a four-year high against the euro after Hungary's opposition Tisza party won Sunday's election in a landslide victory, ending Viktor Orban's 16 years in power.
The landslide is expected to improve Hungary's relationship with the European Union , potentially unlocking funds from the bloc.
The dollar rose slightly after the collapse of the U.S.-Iran peace talks. However, the market reaction was limited which indicates many are still hoping for a de-escalation in the conflict, Commerzbank said.
Bonds:
Eurozone government bond yields rose in early trade, tracking moves in Treasury yields. The 10-year Bund yield rose by 1.4 basis points, while yields on Italian 10-year government bonds rose 4.1 basis points, according to Tradeweb.
Investors' mood improved somewhat in eurozone bond markets following the Middle East cease-fire but continuing geopolitical uncertainties and the latest signals from the German primary government bond market warned against excessive price optimism, LBBW said.
Treasury yields rose in early trade.
Weakness in Treasurys in the seven- to 10-year maturity segment is an opportunity to buy , TD Securities said.
The Treasury market will be left assessing the extent of the damage to U.S. inflation in the wake of the cease-fire in the Middle East conflict, it added. Any increase in issuance to remain modest and be funded largely in the front-end, helping to prevent pressure on long-dated yields.
Energy:
Oil prices may remain sensitive to headlines in the short term, said Phillip Nova.
According to ING, oil prices haven't pushed higher despite escalating tensions in the Strait of Hormuz, likely reflecting a mix of diplomatic engagement and efforts to avoid wider military escalation.
Metals:
Gold prices fell as Trump's threat to block the Strait of Hormuz raised fears of a prolonged energy supply shock, pushing oil back above $100 a barrel.
Gold chart
Comex gold futures are likely to shift to sideways movements, RHB Retail Research said. The futures' relative strength index is rounding downward on the daily chart, which indicates bullish momentum is losing speed.
Aluminum
Aluminum prices jumped to their highest level in four years as Trump's looming blockade of the Strait of Hormuz threatened to further disrupt global supplies.
Iron ore
Iron ore prices were higher in early Asian trading as Chinese steel mills resumed production. Significant drops in raw material prices have boosted steel mill profits, helping boost production of molten iron, Nanhua Futures said.
EMEA HEADLINES
Rheinmetall, Destinus to Jointly Produce Missiles for Europe, NATO
Rheinmetall and aerospace company Destinus teamed up to produce missiles for Europe and some member states of the North Atlantic Treaty Organization.
The two companies will form a joint venture, which should be established during the second half of this year, focused on advanced cruise missiles and ballistic rocket artillery, Rheinmetall said.
Hungary's Orbán Ousted in Landslide Election Defeat
BUDAPEST-Prime Minister Viktor Orbán suffered a landslide defeat in Hungary's election on Sunday, ending the 16-year rule of a politician who had become a standard-bearer for populist right-wing leaders worldwide.
With 98% of the votes counted, Péter Magyar's opposition party was leading with 53.6% of the votes compared with 37.8% secured by Orbán's party, one of the largest winning margins in Hungary's 37 years since the collapse of communism.
Baker Hughes to Sell Waygate Unit to Sweden's Hexagon For Around $1.45 Billion
U.S. oil-field services provider Baker Hughes agreed to sell its Waygate Technologies business to Swedish industrial technology company Hexagon for around $1.45 billion in cash, the companies said.
Based in Germany, Waygate Technologies provides specialty testing and inspection technologies that evaluate the structural integrity of materials across various industries. It generated around $630 million in revenue at a 10% earnings before interest and tax margin in fiscal 2025.
Russia Blasts Through Ukraine Cease-Fire, as Trump-Backed Talks Drift
KYIV, Ukraine-Russian President Vladimir Putin promised a cease-fire for Orthodox Easter.
As of Sunday morning, his army had carried out 28 infantry assaults, 479 artillery bombardments and 1,792 explosive-drone strikes while refraining from long-range strikes, according to Ukraine's military. Russia said it had observed the cease-fire and blamed Ukraine, which had said it would match Russian actions, for breaking it.
GLOBAL NEWS
Oil Back Above $100 as Stalled Peace Talks Sour Market Optimism
Oil jumped back above $100 as U.S. bonds and stock futures fell after weekend peace talks between the U.S. and Iran broke up without resolution.
Market optimism that had lifted stocks late last week unwound on further damage to an already fragile cease-fire. President Trump said that a U.S. blockade on vessels entering or leaving Iranian ports would take effect at 10 a.m. Eastern Daylight Time.
The Market's Next Test Is Already Here
Investors are just starting to shake off a weekslong rout brought on by conflict in the Middle East and surging oil prices. But the next test for stocks has already arrived.
Monday will bring the start of the first-quarter earnings season, with reports due this week from the country's largest financial firms, including Goldman Sachs, BlackRock and JPMorgan Chase.
U.S. Threat to Blockade Hormuz Sets Up Risky New Showdown
President Trump's announcement that the U.S. military would blockade the Strait of Hormuz sets up a risky new showdown that could draw American forces into a prolonged struggle to control the strategic chokepoint while compounding the global economic damage caused by the conflict.
Hours after U.S. peace talks with Iran broke down in Pakistan, Trump said that the Navy would begin the blockade, "seek and interdict" vessels that had paid Iran to get through the strait, and then start clearing the waterway of sea mines. "He added that any Iranian forces that fired on U.S. troops or commercial shipping would be "BLOWN TO HELL."
Trump Weighs Limited Strikes Against Iran After Peace Talks Collapse
President Trump and his advisers are looking at resuming limited military strikes in Iran in addition to the U.S. blockade of the Strait of Hormuz as a way to break a stalemate in peace talks, according to officials and people familiar with the situation.
That is among the options that Trump was considering Sunday, hours after negotiations collapsed in Pakistan, the officials said. Trump could also resume a full-fledged bombing campaign, though officials said that was less likely given the prospect of further destabilizing the region and the president's aversion to prolonged military conflicts. He could also seek a more temporary blockade while he pressures allies to take responsibility for a prolonged military escort mission through the strait in the future.
Trump Criticizes Pope Leo, Accuses Him of Catering to 'Radical Left'
WASHINGTON-President Trump lashed out at Pope Leo XIV following the pontiff's public condemnation of the war in Iran, accusing the leader of the Catholic Church of being weak on crime and catering to liberals.
(MORE TO FOLLOW) Dow Jones Newswires
04-13-26 0516ET
