MARKET WRAPS
European stocks were mixed at the start of the trading week after President Trump dismissed Iran's peace conditions as "totally unacceptable."
The diplomatic deadlock means the Middle East remains in a state of limbo , neither at war, nor at peace.
"Trump does want a deal, but he needs to show to his supporters that [the] U.S. managed to secure a deal on nuclear, which was the whole point of going into the war," Jefferies said.
European energy stocks gained, meanwhile, as traders assessed the impact on oil flows from the region.
"One would expect the market to become increasingly fatigued by the deluge of headlines and the back-and-forth. However, oil prices remain highly sensitive to noise around Iran, highlighting the significance of the ongoing supply disruptions in the Persian Gulf," ING said.
Approaching midday, the FTSE 100 was gaining, the CAC 40 was in negative territory and the DAX and he pan-Europe Stoxx 600 index were mostly flat.
Beyond the Middle East, the expected meeting between Trump and Chinese counterpart Xi Jinping later this week will likely be a big focal point for global markets.
Saxo Bank said Iran and the flow of oil will likely be the most urgent topic of the upcoming meeting. Danske Bank, however, said it doesn't expect any major deals on any front as tariffs, tech, rare earths and agricultural purchases will also likely be on agenda.
Investors can expect to scrutinize German inflation data for April as well as the ZEW economic sentiment indicator for May on Tuesday.
Final French CPI figures for April are due Wednesday, when eurozone industrial production data for March and flash estimate employment data also for the first quarter will be released.
In the U.K., gilt and sterling investors will likely continue to scrutinize the country's local elections, where Prime Minister Keir Starmer's Labour Party suffered large losses.
"The key question for markets is whether the position of PM Starmer will be weakened enough for him to make way for a more left-wing Labour politician," Investec said.
U.S. Markets:
Stock futures pointed to a lower open Monday as investors also prepare for Tuesday's April consumer-price data.
Forex:
The dollar rose as concerns about renewed tensions in the Iran war dampened risk sentiment and lifted oil prices.
Sterlin g fell on risk aversion due to Iran war tensions and fears about a leadership challenge for Prime Minister Keir Starmer after his Labour Party's defeat in local elections last week.
Bonds:
Eurozone government bond yields rose in opening trade, tracking Treasury yields, as oil prices increased with no visible progress towards a resolution in the Middle East.
"Oil price dynamics remain crucial for bond markets and should set a bearish tone at the start of the week," Commerzbank said.
Treasury yields rose as a new week started with the Strait of Hormuz remaining closed. Yields on the short end of the curve increased more than on the long end, extending the pattern of increases seen on Friday.
Treasury yields could be breaking free from purely oil-driven dynamics and are also being pushed higher by evidence of a robust economy and strong corporate earnings, ING said.
Yields on U.K. government bonds climbed as renewed tensions between the U.S. and Iran raised concerns about high energy prices and inflation. Political uncertainty following last week's local elections could spark a leadership challenge, causing investors to add risk premium on gilts.
The eurozone government bond market has now digested the initial price shock in the wake of the Iran war, LBBW said. However, uncertainty over when the situation in the Gulf will ease in a sustainable manner has thwarted a more sustained price recovery.
"On balance, the euro government bond market consolidated at its clearly depressed price level in April, while the intensity of the price swings retreated noticeably compared to the previous month."
Energy:
Oil prices climbed after President Trump said Iran's response to a U.S. proposal to end the war was "totally unacceptable."
Brent crude rose 3.7% to $105.07 a barrel, while WTI futures gained 4.30% to $99.52 a barrel.
Natural Gas
European Gas Prices Rise on Stalled Peace Talks But LNG Transits Limit Gains -- Market Talk
European natural-gas prices rose as stalled U.S.-Iran talks spurred concerns over prolonged disruptions to global energy markets.
Metals:
Gold futures fell as a lack of progress in U.S.-Iran peace talks pushed oil prices higher, fuelling concerns over prolonged disruptions and higher inflation.
"Markets are increasingly expecting higher interest rates to combat inflation risks tied to elevated energy prices, which is negative for non-yielding gold," MUFG said.
EMEA HEADLINES
Prosus Sells Part of Delivery Hero Stake to Aspex Management for About $395 Million
Prosus agreed to sell part of its stake in Delivery Hero to Aspex Management for around 335 million euros ($394.9 million), marking the latest step in reducing its shareholding in the German delivery company.
The move comes weeks after it sold around 4.5% of its stake in Delivery Hero to U.S. tech company Uber, as part of remedies tied to its acquisition of Just Eat Takeaway.
Hannover Re Posts Net Profit Increase With Large Losses Below Budget
Hannover Re reported a jump in first-quarter net profit, benefiting from lower-than-budgeted large losses in its property-and-casualty segment.
The German reinsurer said Monday that net profit for the quarter was 710.6 million euros ($837.7 million), up 48% compared with the year-earlier period. Analysts had expected the group's net profit at 721 million euros, according to consensus estimates compiled by the company.
Saudi Aramco Profit Jumps Despite War Disrupting Shipping Routes
Saudi Arabia's national oil company said its quarterly profit rose 25% as it increased exports via a pipeline that bypasses the Strait of Hormuz, after war in the Middle East disrupted shipping through the vital waterway.
Saudi Arabian Oil Co., which is known as Aramco and is the world's top oil exporter, posted a net profit of $32.5 billion for the three months ending March 31, up from $26 billion in the same period last year.
Iran's Supreme Leader Is MIA, Just When Negotiators Need Him Most
Iran's rulers have a problem as they attempt to negotiate an end to the war: Their new supreme leader is noticeably MIA and silent on the talks.
U.S. and Iranian officials say Mojtaba Khamenei was severely injured in a February airstrike, which killed his wife, son and father, former Supreme Leader Ali Khamenei. Since then, the only thing Iranians have heard or seen from their new leader are messages purportedly written by him and images that appeared to be modified or generated by artificial intelligence.
GLOBAL NEWS
China's Factory-Gate Price Growth Beats Expectations as Mideast War Fuels Inflation
China's factory-gate inflation neared a four-year high in April, continuing a reversal from a long period of deflation as war in the Middle East keeps fueling higher energy costs.
Consumer price growth also accelerated but a backdrop of weak domestic demand and concerns about overcapacity means doubts persist about whether the economy will experience real reflation.
Introducing the 'NACHO' trade: How Wall Street is betting on higher oil prices and persistent inflation
Wall Street is glomming on to yet another acronym inspired in part by Mexican cuisine.
Roughly one year after the acronym "TACO" - which stands for "Trump always chickens out" - went from being a viral joke to a serious moneymaker, traders and strategists across Wall Street have started to toss around "NACHO," or: "Not a chance Hormuz opens." Nobel Prize-winning economist Paul Krugman referenced the acronym in a recent Substack post.
India Asks Locals to Pause Gold Buying in Bid to Shore Up FX Defenses
India's prime minister has urged locals to stop buying gold for a year, an appeal aimed at defending the country's foreign-exchange reserves as geopolitical headwinds keep buffeting the rupee.
Prime Minister Narendra Modi asked citizens in a speech on Sunday to avoid buying gold jewelry for functions, coming as the country's appetite for the precious metal continues to drive foreign-currency spending.
China Exports More EVs Than Traditional Cars for First Time in April
China exported more electric vehicles and plug-in vehicles than gasoline or diesel cars for the first time in April, as automakers expanded aggressively overseas to offset subdued demand in the domestic market.
China exported 769,000 automobiles in April, with new-energy vehicles, a term that includes EVs and plug-in hybrids, accounting for 52.7% of total exports, the China Passenger Car Association said Monday.
The U.S. Tied His Bank to Iran Proxies. Now He's Trump's Choice to Run Iraq.
A little-known Iraqi tycoon named Ali Al Zaidi has emerged as the likely next prime minister of Iraq with the backing of President Trump, who has invited the businessman to Washington and said the U.S. "is with him all the way."
The White House endorsement has come with a demand that Zaidi exclude Iranian-backed militias from Iraq's next government and curtail Tehran's influence in Baghdad.
Xi's China: Dazzling Technology, Military Muscle-and an Economic Mess
More than a decade into Xi Jinping's rule, China's military has grown more formidable, its factories dominate global manufacturing and its technology pioneers are closing the gap with Silicon Valley.
Yet big parts of its economy are a mess. A colossal property bust has destroyed trillions of dollars in wealth, consumer confidence has been gutted and the job market has grown bleak.
Hantavirus Cruise Passengers Head for Home Countries After Ship Reaches Port
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05-11-26 0510ET
