Uncertainty About U.S.-Iran War May Lead To Choppy Trading On Wall Street

The major U.S. index futures are currently pointing to a roughly flat open on Monday, with stocks likely to show a lack of direction following last week’s rally.

Traders may be reluctant to make significant moves amid uncertainty about the U.S. war with Iran following President Donald Trump’s latest threats.

In an expletive-laden Truth Social post Easter Sunday morning, Trump once again threatened to attack Iran’s power plants and bridges unless the Strait of Hormuz is reopened by 8 pm ET on Tuesday.

Crude oil prices initially extended last Thursday’s spike in reaction to Trump’s comments but have given back ground since then amid reports of indirect talks between the U.S. and Iran about a potential ceasefire.

A report from Azios citing four U.S., Israeli and regional sources said the U.S., Iran and a group of regional mediators are discussing the terms for a potential 45-day ceasefire that could lead to a permanent end to the war.

Reuters also reported that the U.S. and Iran are weighing ?the framework of a plan to end the five-week-old conflict but noted Tehran has pushed back against pressure to swiftly reopen the Strait of Hormuz.

A source aware of the proposals told Reuters the Pakistani-brokered plan calls for an immediate ceasefire, followed by negotiations on a broader peace settlement to be concluded within 15 to 20 days.

However, a senior Iranian official told Reuters that Iran won’t reopen the Strait of Hormuz as part of a temporary ceasefire, nor would it accept deadlines or pressure to reach a deal. ?

Stocks recovered from a sharp pullback early in the session on Thursday but showed a lack of direction over the remainder of the trading day. The major averages spent much of the day lingering near the unchanged line.

The major averages eventually ended the day narrowly mixed. While the Dow edged down 61.07 points or 0.1 percent to 46,504.67, the S&P 500 crept up 7.37 points or 0.1 percent to 6,582.69 and the Nasdaq rose 38.23 points or 0.2 percent to 21,879.18.

Early in the session, the Nasdaq tumbled by as much as 2.2 percent, while the S&P 500 and the Dow slumped by as much as 1.5 percent and 1.4 percent, respectively.

Reflecting the rally seen over the two previous sessions, the major averages posted strong gains for the holiday-shortened week. The Nasdaq spiked by 4.4 percent, the S&P 500 surged by 3.4 percent and the Dow jumped by 3 percent.

The early weakness on Wall Street came amid renewed concerns about an escalation of the conflict in the Middle East following President Donald Trump’s primetime address Wednesday night.

While Trump’s speech largely echoed his recent comments and Truth Social posts, traders seemed to respond negatively to the tone of his remarks.

The president reiterated his claim that the war will be over “very shortly” but also said the U.S. is going to hit Iran “extremely hard over the next two to three weeks,” bringing the country “back to the stone ages where they belong.”

Trump also once again called on other countries to “build up some delayed courage” and take control of the vital Strait of Hormuz, claiming, “The hard part is done.”

After moving sharply lower over the past two days amid optimism an end to the conflict, crude oil prices skyrocketed in reaction to Trump’s speech, with U.S. crude oil futures spiking by more than 11 percent.

However, stocks bounced well off their worst levels after a report from Iranian state news agency IRNA said Iran and Oman are drafting a protocol to “monitor transit” through the Strait of Hormuz.

Kazem Gharibabadi, Iran’s deputy minister of legal and international affairs, said the requirements are meant to “facilitate and ensure safe passage and provide better services to ships that pass through this route,” according to a translation of IRNA’s report.

Networking stocks showed a substantial move to the upside on the day, driving the NYSE Arca Networking Index up by 3.9 percent to a record closing high.

Considerable strength was also visible among computer hardware stocks, as reflected by the 2.5 percent surge by the NYSE Arca Computer Hardware Index.

Telecom stocks also showed a significant move to the upside, with the NYSE Arca north American Telecom Index jumping by 2.4 percent.

Oil producer, commercial real estate and natural gas stocks also saw notable strength, while airline stocks moved sharply lower, dragging the NYSE Arca Airline Index down by 2 percent.

Commodity, Currency Markets

Crude oil futures are sliding $0.71 to $110.83 a barrel after skyrocketing $11.42 to $111.54 a barrel last Thursday. Meanwhile, after tumbling $133.40 to $4,679.70 an ounce in the previous session, gold futures are rising $9.60 to $4,689.30 an ounce.

On the currency front, the U.S. dollar is trading at 159.49 yen versus the 159.56 yen it fetched on Friday. Against the euro, the dollar is trading at $1.1549 compared to last Friday’s $1.1515.

Asia

Asian stocks rose on Monday, even as most regional markets remained closed for holidays. While Australia, New Zealand and Hong Kong celebrate Easter, mainland China and Taiwan celebrate the Qingming Festival, the tomb-sweeping holiday.

Regional sentiment was underpinned after all three Wall Street indexes posted strong gains last week on hopes of Iran war de-escalation.

The dollar index was steady in Asian trading, while gold prices fell below $4,650 an ounce as stronger-than-expected U.S. jobs data and rising oil prices linked to the Iran conflict dampened hopes for Federal Reserve rate cuts this year.

The March U.S. employment data showed a strong rebound from February’s weak numbers. The U.S. economy added 178,000 jobs in March, well above the consensus estimate of 59,000, while the jobless rate dropped to 4.3 percent from 4.4 percent, driven by a big drop in labor force participation.

Brent crude prices held below $110 a barrel in Asian trading, giving up some early gains after reports emerged that the United States and Iran are engaged in indirect negotiations to explore a potential 45-day ceasefire that could lead to a more permanent resolution to the conflict.

The diplomatic push came after U.S. President Donald Trump renewed his threat to attack Iran’s bridges and power plants, warning he would bring “Hell” to Iran if they do not open the vital Strait of Hormuz by 8 p.m. Eastern Time on Tuesday.

Trump said he plans to hold a news conference “with the Military” at the Oval Office at 1 p.m. on Monday after U.S. forces rescued an American airman in Iran last week.

Tehran condemned Trump’s remarks as an “incitement to war crimes” and warned they would respond “in kind” to any attacks on its infrastructure.

Describing Thump’s threats as a sign of desperation and rage, Iran’s President’s office said the Strait of Hormuz will be reopened only when all war damages are compensated from transit tolls.

Meanwhile, OPEC+ warned after a weekend meeting that war-related damage to energy infrastructure could have lasting repercussions for oil supply even after the conflict subsides.

The group has decided to increase oil output by 206,000 barrels per day in May to help address a global supply shortfall, although Iran indicated that Iraq would be exempt from restrictions it imposed on ships passing through the Strait of Hormuz.

Japanese markets closed higher on hopes of an Iran ceasefire. The Nikkei 225 Index jumped over 800 points before paring gains to close up 290.19 points, or 0.6 percent, at 53,413.68. The broader Topix Index finished marginally lower at 3,644.80.

Tech stocks topped the gainers list, with chip-testing equipment maker Advantest rising 1.7 percent and technology investor SoftBank Group gaining 1.1 percent.

Benchmark Japanese government bond (JGB) yields surged to multi-decade highs today, with the benchmark 10-year JGB yield rising by 2 basis points (bps) to 2.400 percent, the highest since February 1999, driven by escalating inflation risks from the Middle East conflict. The five-year yield rose by 2 bps to 1.815 percent.

Seoul stocks rallied on robust U.S. jobs data and new hopes for a swift end to the Middle East conflict. The Kospi surged 73.03 points, or 1.4 percent, to 5,450.33.

Samsung Electronics jumped 3.7 percent ahead of its preliminary first-quarter report due on Tuesday, with some analysts expecting its operating profit to surpass the 40 trillion-won mark for the first time.

Shares of Poongsan, a leading producer of copper alloys, soared nearly 13 percent following reports that Hanwha Aerospace is seeking to take over its ammunition business.

Europe

The major European markets were closed on Monday in celebration of Easter Monday.

U.S. Economic News

The Institute for Supply Management is scheduled to release its report on service sector activity in the month of March at 10 am ET. The ISM’s services PMI is expected to fall to 54.7 in March from 56.1 in February, but a reading above 50 would still indicate growth.