By Dow Jones Newswires Staff
Oil retreated, U.S. stock futures rose and Treasury yields slid as traders took encouragement from President Trump's comments that the conflict in Iran will end "very soon."
Brent crude extended Monday's sharp reversal to trade just above $90, though prices were still significantly elevated from pre-war levels. Shipping through the Strait of Hormuz remains effectively blocked, while Iran's foreign minister ruled out negotiations.
The slide in oil prices eased energy inflation fears, cooling sovereign bond yields across the globe. Traders now await upcoming U.S. inflation releases key to the Federal Reserve's inflation outlook, with CPI due Wednesday and PCE figures on Friday.
--Brent crude fell 8.1% to $90.92 a barrel, while WTI is down 7% to $80.56 a barrel, after both benchmarks hit their highest levels since 2022 Monday. "Trump's words will only go so far," analysts at ING said. "Ultimately, the market will need to see a resumption of oil flows through the Strait of Hormuz to sustain a move lower in oil prices." Trump also said the U.S. would be removing oil-related sanctions on certain countries as a way to lower prices. However, analysts said that relaxing sanctions on Russia would probably do little to boost global supply, given the country has already been navigating around existing restrictions.
European natural-gas prices also plunged--the front-month Dutch TTF contract dropped 15% to 48.06 euros a megawatt-hour.
--U.S. stocks continued to gain in premarket trade after ending the day up Monday. Futures for the S&P 500 were up 0.4%, while the Dow Jones Industrial Average climbed 0.3%. Futures for the Nasdaq rose 0.5%.
Monday saw sharp price swings as markets reacted to comments from President Trump. "The fact that investors overreact to every piece of news without questioning feasibility adds another layer of difficulty when navigating markets," Swissquote's Ipek Ozkardeskaya said.
--Asian equities rebounded in early Asian trade on Tuesday, making a sharp U-turn from the prior day. The sectors most affected by oil prices, such as shipping and airlines, rebounded as well. South Korea's Kospi gained 5.3%, recovering from Monday's rout as chip and tech stocks bounced back. Chips led the gains in Japan too, pushing the Nikkei Stock Average up 2.9%.
China's benchmark Shanghai index rose 0.65%, while the tech-heavy ChiNext index added 3.0%, after data showed that exports surged at the start of the year--powered by chips, autos and ships. Imports to China jumped too, which could soothe concerns about trade imbalances.
--European indexes gained across the board in a reversal of moves Monday morning, as all major sectors rallied except energy. Banks led European indexes, pushing the Italian FTSE MIB and Spanish IBEX 35 up 2.3% and 2.5%, respectively. Germany's DAX climbed 2% as industrials that tumbled Monday recovered, with Siemens Energy gaining 5.8%. The U.K.'s FTSE 100 climbed 1.4% as banks and miners gained, while airlines group IAG rallied 5.8%. Oil majors BP and Shell both slipped. In Paris, the CAC 40 climbed 1.85% on gains for banks and industrials.
--The dollar fell as oil prices retreated, as the DXY dollar index falls 0.5% to 98.704 after reaching a three-month high of 99.695 Monday. The euro rose to a one-week high of $1.1663.
--U.S. Treasury yields declined in overnight trade, reversing a recent spike induced by higher oil prices. "Expect risk to get bought for a bit, but don't get too carried away with this," ING's Padhraic Garvey and Benjamin Schroeder said. The 10-year Treasury yield fell 2.3 basis points to 4.110%, according to Tradeweb.
Eurozone government bond yields fell back, led by Italian BTPs and French OATs. The 10-year German Bund yield fell 5.4 basis points to 2.815%, the 10-year Italian BTP yield slid 13 basis points to 3.501%, and the 10-year French OAT yield was down 10.3 basis points at 3.416%.
--Bitcoin found some stability above the $70,000 mark as risk sentiment recovered, putting $73,000-$74,000 as the key resistance level to watch. A clean break above that opens the door to $78,000-$80,000 BTC Markets said. Bitcoin rose 1.9% to $70,327 in early European trade.
--Gold prices rose on a softer dollar and easing concerns over high energy costs. Futures in New York rose 1.6% to $5,187.90 a troy ounce, while the U.S. dollar index was down 0.6% to 98.53.
Write to Barcelona Editors at barcelonaeditors@dowjones.com
(END) Dow Jones Newswires
03-10-26 0524ET
