Bonds and Stocks Drop as Oil Soars Following Hormuz Chaos – Europe Market Wrap

Oil prices rose, pushing US equities and Treasuries lower after a rocky weekend in the Middle East threw doubt on the prospects for peace talks ahead of a ceasefire deadline.

Brent climbed 4.6% to $95 per barrel after the US Navy seized its first Iranian vessel in the Strait of Hormuz. Iran barred passage across the river less than 24 hours after claiming ships could pass.

S&P 500 futures dipped 0.4% as the benchmark set a string of new highs. European stocks fell 1%. Bond rates in Europe surged substantially, while Treasuries moved relatively modestly. Gold fell below $4,800 per ounce, while the Dollar moved higher.

Any indication from Warsh that he will push for monetary easing this year and expect a war-related energy shock might lift short-term Treasuries even more. Money markets are pricing in about a 50% possibility of a rate drop by December.

Meanwhile, the earnings season has started off strong. On average, S&P 500 companies that have declared their results have seen profits come in 11% higher than expected, according to data.