Stock market makes gains despite ongoing U.S.-Iran tensions, reversing losses from war

U.S. stocks rallied Monday and recovered the last of their losses caused so far by the U.S. and Israel’s war with Iran, as Wall Street remains hopeful that the global economy can still avoid a worst-case scenario.

The S&P 500 rose one per cent and pulled back within 1.3 per cent of its all-time high set early this year. The Dow Jones Industrial Average added 301 points, or 0.6 per cent, and the Nasdaq composite climbed 1.2 per cent.

In Canada, the S&P/TSX composite index was up 183.48 points at 33,879.24.

Even in the oil market, where prices jumped above $100 US per barrel after ceasefire talks failed to end the war, prices pared their leaps as Monday progressed. The moves were more modest than the extreme swings that have been hitting financial markets since the war began in late February.

After the weekend’s talks failed, U.S. President Donald Trump vowed to blockade the Strait of Hormuz.

A blockade would keep even more oil off the global market, after prices already jumped worldwide because of shortfalls due to Iran’s restrictions on traffic in the important strait. That narrow waterway is how much of the oil produced in the Persian Gulf area reaches customers worldwide. Iran responded by threatening all ports in the Persian Gulf and the Gulf of Oman.

The price of Brent crude, the international standard, rose 4.4 per cent to settle at $99.36 US — well above its roughly $70 US price from before the war. But it remains below the $119 US peak it’s touched at times when worries about the Iran war have been at their heights — and pulled back from its nearly $104 US price reached earlier Monday morning.

“Markets are taking some encouragement from the fact that the two sides are talking and that the broader ceasefire seems to be holding, for now,” said Sameer Samana, head of global equities and real assets at Wells Fargo Investment Institute.

In the meantime, big U.S. companies are beginning to tell investors how much money they made during the first three months of the year. Strong reports could help make up for Wall Street’s worries about the Strait of Hormuz because stock prices tend to follow the trend of corporate profits over the long term.

In the bond market, Treasury yields ticked lower as oil prices receded from their morning highs. The yield on the 10-year U.S. Treasury fell to 4.29 per cent from 4.31 per cent late Friday.

In stock markets abroad, indexes fell across much of Europe and Asia. Hong Kong’s Hang Seng fell 0.9 per cent, and South Korea’s Kospi dropped 0.9 per cent for two of the world’s larger losses.

WATCH | War driving up some grocery prices:

Which groceries are getting more expensive due to the Iran war?

The impact of rising fuel prices caused by the U.S. and Israel-Iran war is expected to show up next at the grocery store, starting with imported produce and some meat and dairy products.