Bargain Hunting May Contribute To Initial Rebound On Wall Street

The major U.S. index futures are currently pointing to a higher open on Monday, with stocks likely to regain ground following the steep drop seen last week.

Bargain hunting may contribute to initial strength on Wall Street, as some traders look to pick up stocks at reduced levels after recent weakness.

The slump seen last week dragged the major averages down to their lowest closing levels in over eight months.

Optimistic comments from President Donald Trump about the war in the Middle East may also generate some early buying interest.

Trump claimed in a post on Truth Social this morning that the U.S. has made “great progress” in discussions with a “new, and more reasonable, regime” to end military operations in Iran.

However, Trump warned that if a deal not reached shortly, the U.S. will “conclude our lovely ‘stay’ in Iran by blowing up and completely obliterating all of their Electric Generating Plants, Oil Wells and Kharg Island (and possibly all desalinization plants!)”

Buying interest may be somewhat subdued, however, as the price of crude oil sees further upside amid ongoing concerns about the impact of the Middle East war.

Stocks moved sharply lower over the course of the trading day on Friday, adding to the steep losses posted in the previous session. The major averages moved to the downside early in the session and slid even more firmly into negative territory as the day progressed.

The major averages climbed off their worst levels going into the end of the day but still posted steep losses. The Nasdaq plunged 459.72 points or 2.2 percent to 20,948.36, the Dow tumbled 793.47 points or 1.7 percent to 45,166.64 and the S&P 500 slumped 108.31 points or 1.7 percent to 6,368.85.

For the week, the Nasdaq plummeted by 3.2 percent, the S&P 500 dove by 2.1 percent and the Dow slid by 0.9 percent. The steep losses dragged the major averages down to their lowest closing levels in over eight months.

A continued surge by the price of crude oil weighed on Wall Street, with international benchmark Brent crude futures jumping back above $110 a barrel after soaring by more than 5 percent during Thursday’s trading.

The extended spike by crude oil prices came even though President Donald Trump extended the pause on attacking Iran’s energy plants by 10 days to April 6th.

Trump claimed in a post on Truth Social that negotiations with Iran are “going very well,” although Iranian state media has said Tehran “responded negatively” to a U.S. peace proposal.

“Comments from Washington and Tehran about a potential peace process seem to come from parallel worlds, with the former indicating talks are going well while the latter effectively denies talks are even happening,” said AJ Bell investment director Russ Mould.

“For now, fighting continues and the path out of the current crisis remains unclear,” he added. “Oil prices, probably the best indicator, remain elevated and have reached $110 per barrel again.”

Mould noted that the longer crude oil prices remain at elevated levels the greater the fear of inflationary pressures returning in a meaningful way.

Airline stocks showed a substantial move to the downside on the day, resulting in a 4.7 percent nosedive by the NYSE Arca Airline Index.

Biotechnology, software and computer hardware stocks also saw considerable weakness, contributing to the steep drop by the tech-heavy Nasdaq.

Financial, retail and healthcare stocks also showed significant moves to the downside, while gold stocks bucked the downtrend amid a sharp increase by the price of the precious metal.

Commodity, Currency Markets

Crude oil futures are jumping $1.25 to $100.89 a barrel after soaring $5.16 to $99.64 a barrel last Friday. Meanwhile, after surging $116.20 to $4,492.50 an ounce in the previous session, gold futures are climbing $76.80 to $4,569.30 an ounce.

On the currency front, the U.S. dollar is trading at 159.45 yen versus the 160.31 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.1482 compared to last Friday’s $1.1508.

Asia

Asian stocks ended mostly lower on Monday as rising energy risks amid escalating U.S.-Iran tensions rattled investors.

Oil prices headed for their biggest monthly rise ever as the Middle East conflict entered its fifth week with no clear resolution in sight.

Investors braced for a prolonged Gulf conflict after the Houthis joined the Iran war and additional U.S. troops arrived in the Middle East.

Gold reversed earlier losses to trade around $4,530 an ounce in Asian trading as the dollar softened ahead of Federal Reserve Chair Jerome Powell’s speech later in the day and a slew of key U.S. labor market data due this week.

Brent crude prices traded about 3 percent higher close to $116 per barrel after reports that the Pentagon is preparing for weeks of ground operations in Iran.

There are fears that the Yemini Houthis may launch strikes on vessels transiting the Red Sea and key Saudi Arabian energy infrastructure.

China’s Shanghai Composite Index reversed an early slide to end 0.2 percent higher at 3,923.29 on expectations that a shift toward reflation may revive corporate earnings.

Hong Kong’s Hang Seng Index fell 0.8 percent to 24,750.79, dragged down by technology stocks as diplomatic tensions flared over Hong Kong security rules.

Japanese markets plummeted on stagflation fears as bond yields hit a 25-year high on rising BoJ rate-hike bets.

The Nikkei 225 Index plunged as much as 5.3 percent before recovering some lost ground to end 2.8 percent lower at 51,885.85. The broader Topix Index settled 2.9 percent lower at 3,542.34.

Among the prominent decliners, SoftBank Group plunged 6.3 percent, Ibiden lost 5.9 percent, Toyota Motor tumbled 4 percent and Hitachi gave up 3.4 percent.

Seoul stocks sank as crude prices extended their surge on supply disruption fears. The Kospi ended down 3 percent at 5,277.30, extending losses for a third consecutive session.

Heavyweight shares fell on foreign selling, with Samsung Electronics losing 1.7 percent and SK Hynix plummeting 5.3 percent.

Australian markets ended notably lower, with financial and healthcare stocks leading losses. The benchmark S&P/ASX 200 Index ended down 0.7 percent at 8,461, trimming early losses as energy and mining stocks gained strength.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index slumped 1.4 percent to 12,748.92, extending losses from the prior session.

Europe

European stocks have moved mostly higher during trading on Monday, regaining ground following the weakness seen in the two previous sessions.

As the joint U.S.-Israeli war on Iran stretched into its second month, French central bank chief Francois Villeroy de Galhau said the European Central Bank is ready to act, but it is too early to discuss the timing of any rate hike.

Brent crude price traded about 2 percent higher in European trading amid a lack of progress in bringing an end to the four-week-old Middle East conflict.

While the U.K.’s FTSE 100 Index is up by 1.1 percent, the French CAC 40 Index and the German DAX Index are both up by 0.4 percent.

Dutch automaker Stellantis has edged higher after announcing the renewal and expansion of its long-standing partnership with Palantir Technologies.

GSK has also moved to the upside after its drug Exdensur received approval in China for the treatment of asthma.

Rio Tinto shares have also jumped in London. The mining giant said operations at three of its four Pilbara iron ore port terminals have resumed after Tropical Cyclone Narelle passed over Western Australia’s Pilbara region.

Meanwhile, INWIT has dropped after Telecom Italia scrapped a plan to renew a mobile-phone agreement with the mobile towers group.

U.S. Economic News

Federal Reserve Chair Jerome Powell is due to participate in a moderated discussion at the Harvard University Principles of Economics Class at 10:30 am ET.

At 4 pm ET, New York Federal Reserve President John Williams is scheduled to participate in a conversation at an event organized by the Staten Island Economic Development Corporation.