Trump says Iran war "close to over" amid hopes for more negotiations
By Caroline Valetkevitch and Marc Jones
NEW YORK/LONDON, March 26 (Reuters) - Major stock indexes eased on Thursday as Brent oil futures rose above $105 a barrel, with Iran’s denial of any talks with the U.S. dimming hopes of a quick resolution to the nearly one-month-long Middle East war.
Global debt markets also sold off, pushing yields higher, while safe-haven buying boosted the U.S. dollar.
Prospects of a prolonged war in the Middle East fanned worries about energy supply disruptions. Oil and European natural gas rose, with Brent futures up $4.77 at $106.99 a barrel and U.S. crude futures up at $93.64.
U.S. President Donald Trump warned Iran on Thursday to "get serious" about a deal to end nearly four weeks of fighting.
Iran’s Foreign Minister Abbas Araqchi had earlier said Tehran was reviewing the U.S. proposal but that there were no talks on winding down the war. Iran on Thursday launched multiple waves of missiles at Israel.
The war, triggered by U.S.–Israeli strikes on Iran in late February, has rattled global markets and effectively shut the Strait of Hormuz, a conduit for a fifth of global oil and liquefied natural gas flows.
Stocks fell "as oil prices resumed their upward climb", said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
"Unfortunately, we’re in a market that’s being driven by oil prices. The rhetoric back and forth is continuing, and until talks begin, the market is going to be subject to the price of oil," he said.
The Dow Jones Industrial Average fell 75.50 points, or 0.19%, to 46,342.69, the S&P 500 fell 43.59 points, or 0.68%, to 6,547.14 and the Nasdaq Composite fell 216.95 points, or 1.02%, to 21,705.16.
MSCI’s gauge of stocks across the globe dropped 6.75 points, or 0.68%, to 988.71. The pan-European STOXX 600 index fell 0.64%.
Japan’s Nikkei ended down 0.3%, while worries over rising energy costs hammered South Korea’s KOSPI, which slumped 3.2%. Hong Kong’s Hang Seng fell 1.9% and China’s blue chips dropped 1.3%.
The Philippines held an unscheduled central bank meeting due to the turmoil, while Germany’s central bank head said an ECB rate hike next month was "an option".
Fears of a 2022-style inflation shock have seen traders fully price out any chance of a Federal Reserve rate cut this year, further supporting the dollar.
Germany’s two-year bond yield, sensitive to European Central Bank rate expectations, rose after falling on Wednesday. Bond yields move inversely to prices.
Worries about persistent inflation also drove U.S. Treasury yields higher. The benchmark U.S. 10-year Treasury yield was last up 4.2 basis points at 4.37%. The two-year note’s yield was last up 5.4 bps at 3.934%.
Earlier, the yield on Japan’s two-year government bond hit its highest level in 30 years at 1.33%, as traders cemented bets on another Bank of Japan rate hike as early as next month. [JP/]
In currencies, the U.S. dollar rose against most major currencies, reviving its safe-haven appeal.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.1% to 99.75, with the euro down 0.13% at $1.1544.Against the Japanese yen, the dollar strengthened 0.04% to 159.53.
Gold retreated as the dollar rose. Spot gold was down 0.89% at $4,465.06 an ounce.
