Relief Rally in US Stocks Slows as Treasuries Fall – Europe Market Wrap
As traders evaluated the possibility of a more significant disruption to Middle Eastern oil supplies, a surge in US stocks subsided. The Dollar continued to lose ground as Treasury bonds declined.
Gains of up to 0.5% were trimmed as S&P 500 contracts increased by 0.2%. The Stoxx 600 in Europe saw its largest increase since April. Following Trump’s statement that the Iranian war would end “very soon,” Brent continued to slump, dropping 7% below $91 per barrel. Prior to Oracle’s earnings, Nasdaq 100 futures increased by 0.2%.
Treasuries fell back, with the 10-year yield climbing two basis points to 4.11%. European bonds rallied on expectations that oil prices will have a smaller impact on inflation than previously thought, lowering the prospects for interest rate hikes. Gold remained stable. The Dollar declined for the third consecutive day.
The recovery in US stocks is stalling as fears of a protracted Iranian war sparked seismic changes in oil prices. Much is dependent on geopolitical developments, with flows through the Strait of Hormuz lingering at a near halt and Gulf producers deepening production restrictions.
The year has seen the rise of concerns that artificial intelligence will be a disruptive technology capable of wiping out riches for shareholders and creditors. Stubbornly high inflation has also raised doubts about the Fed’s ability to resume rate cuts.
