After a muted start to the day, the Nasdaq and the S&P 500 picked up some steam on Monday afternoon after US President Donald Trump said that Iran wants to make a deal but that he will not come to any agreement that allows Tehran to have a nuclear weapon.
This was after Trump announced that the US military began a blockade of ships leaving Iran’s ports, while Tehran threatened to retaliate against ports of its Gulf neighbours after weekend talks on ending the war broke down.
“And so there seems to be some desensitisation around these back and forth talks with negotiations on, negotiations off, especially in the midst of this ceasefire, which seems to be holding for the moment,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.
Oil prices, which had surged back above US$100 a barrel as the United States imposed a blockade on Iran’s imports, later eased. Both major contracts ended higher but below US$100 a barrel.
“The market is betting that Trump will get some sort of a deal,” said Peter Cardillo of Spartan Capital Securities.
Chicago Federal Reserve President Austan Goolsbee said oil futures markets are pricing an expectation the surge in oil prices will be short-lived, and that as long as this is the case the impact on the US economy may be limited.
The Dow Jones Industrial Average rose 301 points, or 0.6 percent, to 48,218, the S&P 500 gained 69 points, or 1 percent, to 6,886 and the Nasdaq Composite gained 280 points, or 1.2 percent, to 23,183.
However, volume was light with 15.9 billion shares changing hands compared with the 19.1 billion moving average for US exchanges’ last 20 sessions.
By Monday’s close the S&P 500 had erased all its losses after the war began as it closed 0.1 percent above its February 27 finish. (Reuters)
