US Stocks Drop as Investors Await Details of the Peace Talks – Europe Market Wrap
US markets fell after a rise fuelled by optimism about a potential Middle East peace accord, with traders now expecting confirmation of a new round of talks.
S&P 500 futures dipped 0.2% after the benchmark closed just shy of a record on Tuesday. The Stoxx 600 in Europe fell 0.2% after luxury manufacturers Hermes and Kering issued poor sales updates. In Asia, China’s mainland blue-chip index became the most recent indicator to recoup losses since the Iran war began.
Stock and bond markets continue to price out much of the risk premium that has accrued since the crisis began in late February, as the US and Iran attempt to arrange a second round of negotiations. Trump told the New York Post that discussions could restart “over the next two days” and claimed in a Fox Business interview that the war is “close to being over.”
Brent recovered from early losses to gain 1.9% above $96 per barrel as the US moved ahead with a naval blockade of the Strait of Hormuz. Treasuries fell, with the two-year yield jumping 2 bps to 3.76%. The Dollar increased slightly, while gold slipped below $4,800 per ounce.
Investors have returned to markets despite the fact that there is no apparent end to the war, which has cut off roughly a fifth of global crude supplies and caused a spike in inflation, prompting central banks to tighten policies.
