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Yahoo
12 hours ago
- Business
- Yahoo
Stock markets are ignoring the war as they wait for the Fed
Israel's air war on Iran entered its fourth day and the price of oil went up again, but the markets appear to be shrugging off the conflict. S&P 500 futures inched up this morning following gains in Europe and Asia. Investors appear to be positioning for a classic 'buy the rumor, sell the news' event in front of the U.S. Federal Reserve's interest rate decision on Wednesday. The Fed is expected to leave rates where they are, so don't be surprised if you see a moderate amount of profit-taking if that decision is confirmed. The stock markets also seem to be unbothered by the ongoing conflict in the Middle East even though the VIX volatility index is sharply up. Deutsche Bank's Henry Allen put it best in a note to clients sent this morning: 'Geopolitics doesn't normally matter much for long-run market performance. This is a pretty consistent pattern, including over the last two years with the Middle East. For instance, there was a brief risk-off move in April 2024 after Iran's attack on Israel, but markets quickly recovered. Then in October 2024, further Iranian strikes led to an oil price spike, but when Israel's response was more limited than many anticipated, prices fell back again. This week's events have clearly been much bigger than 2024. But apart from commodities and Middle Eastern equities, the wider market impact has been limited. In fact, the MSCI World index closed just over -1% beneath its record on Thursday.' UBS's Paul Donovan concurred: 'The ongoing exchange of missile strikes between Iran and Israel this weekend has not had a major impact on financial markets. … Further market moves would be justified only if there were expectations of even more disruption to energy supplies or shipping lanes,' he said this morning. Goldman Sachs's Jan Hatzius and his team predict the Fed will remain on hold. Inflation and economic growth both appear to be moderate, so it's not clear whether the Fed needs to intervene by moving the interest-rate needle either way, they told clients. 'The FOMC will likely reiterate that it plans to remain on hold until it has further clarity and downplay its longer-term projections as highly contingent on a still very uncertain economic and policy outlook,' they wrote. Here's a snapshot of the action this morning prior to the opening bell in New York: The VIX fear index rose 14% today. U.S. crude oil rose 1.23% to $73.88 a barrel, after rising more than 7% last week. S&P 500 futures were up 0.51% this morning despite turmoil in the oil markets. The S&P 500 closed down 1.13% on Friday, at 5,976. Bitcoin is sitting above $107K. Japan's Nikkei 225 was up 1.26%. India's Nifty 50 rose 0.9%. China's Composite rose 0.35%. Stoxx Europe 600 was up 0.35% in early trading. This story was originally featured on
CNBC
a day ago
- Business
- CNBC
What it would take for the stock market to really start to worry about geopolitics
Equity and energy markets appeared to shake off concerns of a wider conflict in the Middle East on Monday, reversing some of the moves from late last week and suggesting that it may take significant military escalation to cause a more lasting sell-off. Traders who look beyond geopolitical issues are not unusual, and this conflict has yet to create the type of damage that has hurt markets in the past, said Henry Allen, London-based macro strategist at Deutsche Bank. "Historically, it's only been when it's affected macro variables like growth and inflation. So for markets, the geopolitical events that mattered were the stagflation shocks, like the 1970s oil crises, the Gulf War in 1990 and Russia's invasion of Ukraine in 2022. Today, we haven't seen a shock on that scale so far," Allen wrote in a report to clients. West Texas Intermediate crude futures briefly traded above $77 per barrel on Friday but were below $72 on Monday afternoon. The global benchmark for oil prices, Brent crude, is still trading below its average price in 2024, Allen noted. @CL.1 5D mountain Oil futures have retreated from their Friday highs. In a separate note, another strategist at Deutsche Bank said that the equity market's current set-up could make it even more resilient than the historical data shows. "Historically, the S & P 500 tends to fall around -6% in the three weeks following a geopolitical shock, only to recover fully over the subsequent three weeks," Jim Reid, the bank's global head of its fundamental credit strategy group, wrote. "Our strategists argue that the bar for a more significant sell-off is higher this time, as equity positioning is already quite light." The moves on Monday came as Iran and Israel continued to attack one another. NBC News , however, reported that Iran was asking other Middle East nations to push President Donald Trump to press Israel for a ceasefire in exchange for flexibility on nuclear talks. To be sure, the conflict between Iran and Israel would focus investor attention more if it drives up inflation by disrupting the oil market. "Although equity markets have historically proven quite resilient to geopolitical events — in 60% of the major events since 1940, U.S. equities were up in the subsequent three months — the main exception has been when there was an oil price shock," according to Alastair Pinder, head of emerging markets and global equity strategist at HSBC Global Research. "In such instances, global equities fell 8% over the next two months," he said in a note to clients. Inflation remains near top of mind for investors, as major data series still show that the annual rate of price increases remains above the Federal Reserve's 2% target. Wall Street will get an updated look at how the central bank views inflation on Wednesday, when a new policy statement and economic projections are released.
CNBC
2 days ago
- Business
- CNBC
What analysts say it will take for the Israel-Iran conflict to rattle the markets
The Israel-Iran conflict escalated over the weekend — not that you could tell by looking at the financial markets on Monday. The major U.S. stock benchmarks opened higher. Oil prices fell. Gold, the ultimate safe-haven asset, also edged lower. Abroad, the pan-European Stoxx 600 was slightly higher and stock indexes in the Asia-Pacific region climbed, too. It is basically the mirror opposite to Friday's action, as Israel's first round of strikes on Iran's nuclear facilities coursed through global markets, sending equities lower, oil surging and gold gaining. Investors following the news over the weekend might've expected more of the same Monday, especially after learning that Israel attacked Iranian energy infrastructure. Iran's missile strikes also damaged an oil refinery in Haifa, the Times of Israel reported . So why is the market on Monday so far shrugging it all off? In simple terms, traders and investors are betting that the attacks between the two longtime adversaries will not spillover into a broader regional conflict that disrupts the global economy. Whether that's the right bet remains to be seen. As CNBC reported Monday , some market watchers say investors are underpricing "the risk of a major conflagration in the Middle East." However, not long after Monday's opening bell, The Wall Street Journal reported that Iran is signaling to other countries that it wants to end the fighting with Israel — evidence in support of the bet traders were already making. Deutsche Bank macro strategist Henry Allen weighed in on the subdued market reaction earlier Monday in a note to clients titled, "Will geopolitics actually have a market impact this time?" "Historically, it's only been when it's affected macro variables like growth and inflation," Allen wrote. "So for markets, the geopolitical events that mattered were the stagflation shocks, like the 1970s oil crises, the Gulf War in 1990, and Russia's invasion of Ukraine in 2022." Allen pointed out that while Brent crude prices jumped around 7% on Friday to roughly $74 a barrel, the international oil benchmark is still below its 2024 average of roughly $80. "So this isn't causing wider inflationary problems yet. Clearly, a larger price spike would evoke the 2022 scenario where central banks hiked rates to clamp down on inflation," Allen wrote. "But so far at least, we've yet to see that. If anything, the extent of the market's resilience to repeated shocks this year has been a significant story in itself." Our main takeaway from Deutsche Bank's note: where the price of oil goes in response to the Israel-Iran conflict matters the most for the global economy — and therefore the stock market. As CNBC's senior markets commentator Michael Santoli put it Monday: "Equites aren't going to overthink it if oil is not going to add in any more risk premium in response to anything like a conflict we're seeing right now." The biggest risk to oil prices is that Iran shuts down the Strait of Hormuz, a waterway situated between Iran and Oman that is "the world's most important oil chokepoint," according to the U.S. Energy Information Administration . Extended disruption to shipping in the Strait of Hormuz could result in oil prices spiking above $100 a barrel, Goldman Sachs estimated on Friday. About 20% of global oil production flows through the Strait of Hormuz, the firm said. To be sure, Goldman analysts said they did not believe trade disruptions had a high probability. Citigroup's global head of commodities research, Max Layton, said he would've expected to see stronger oil prices again on Monday. "Clearly, there was a lot of short-covering, a lot of call-buying on Friday and no follow-through with actual long positions today," Layton said on CNBC. Still, Layton said the market isn't ignoring the Israel-Iran situation. "There's already a very big geopolitical risk premium in the market. We estimate it's around $10 to $12 at the moment, and that risk premium is there for a reason," he said. "There's been no real oil export or oil production disruption in Iran, and yet the market is trading $10 to $12 higher. That obviously reflects the potential for a significant, if temporary, disruption to the Strait of Hormuz supply." An important counterbalance for crude prices right now is that the Organization of the Petroleum Exporting Countries is in the process of increasing oil production, Layton noted. That is "really important to help explain why there hasn't been any follow-through in terms of fresh long positions in the market today," he said. "Often investors, when they're thinking about a trade, they need not just the short-term [outlook] to be bullish. And there's obviously catalysts for higher prices in the very term. But they also need the medium-to-long-run outlook to be bullish. ... Our 12-month forecast remains $65 Brent and we haven't seen anything that would change that medium-to-long-term outlook, which is still bearish from these prices." (See here for a full list of the stocks in Jim Cramer's Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Yahoo
5 days ago
- Business
- Yahoo
Nvidia, Amazon, Google Lead Tech Selloff After Israel Strikes Iran
June 13 - Tech stocks tracked broader markets lower as Middle East tensions rose. The iShares Expanded Tech-Software Sector ETF slipped about 1%, while the Philadelphia Semiconductor Index fell about 2%. Among large-cap names, Google (NASDAQ:GOOGL) and Amazon (NASDAQ:AMZN) each dropped about 1%, and Nvidia (NASDAQ:NVDA) slid about 1%. Meta Platforms (NASDAQ:META) was little changed, and Microsoft (NASDAQ:MSFT) also saw minimal movement. Apple (NASDAQ:AAPL) showed modest gains but remained within a narrow range. Palantir (NASDAQ:PLTR) bucked the trend, climbing about 1%, possibly on its ties with defense contracts. (NASDAQ:MNDY) declined about 3%, reflecting sensitivity to geopolitical uncertainty. Semiconductor stocks broadly ceded ground: Taiwan Semiconductor Manufacturing (TSM) fell about 2%, Micron Technology (NASDAQ:MU) slipped about 1%, Qualcomm (NASDAQ:QCOM) lost about 1%, and Marvell Technology (MRVL) slid about 2%. IBM (NYSE:IBM) and Kyndryl Holdings (NYSE:KD) each edged down about 1%. The S&P 500, Nasdaq Composite, and Dow all retreated roughly 1% as investors weighed the impact of Israel's strikes on Iran. The effects of the attack have cascaded across global markets, with a strong risk-off move for several asset classes, said Deutsche Bank's Henry Allen. Israeli Prime Minister Benjamin Netanyahu said, This operation will continue for as many days as it takes to remove this threat, underscoring uncertainty. Market participants remain alert to how the situation might affect tech demand and broader sentiment. This article first appeared on GuruFocus. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
05-06-2025
- Business
- Yahoo
Treasury Rally Eases as Investors Cautious on Jobs and Outlook
(Bloomberg) -- A rally in US Treasuries steadied, with investors cautious ahead of Friday's jobs report and slightly paring bets on interest-rate cuts from the Federal Reserve. ICE Moves to DNA-Test Families Targeted for Deportation with New Contract The Global Struggle to Build Safer Cars NYC Residents Want Safer Streets, Cheaper Housing, Survey Says The Buffalo Architect Fighting for Women in Design On Thursday the two-year yield rose as much as two basis points to 3.89%, trimming a steep decline in the previous session triggered by softer-than-expected US economic data. Traders still fully priced two quarter-point cuts from the Fed this year, but trimmed wagers on a third move. Investors are awaiting US non-farm payrolls data to gauge the outlook for monetary policy. Data earlier this week showed hiring in the private sector decelerated to the slowest pace in two years, but some analysts say that's not enough to trigger sustainable gains in Treasuries. The data 'weren't so bad as to revive fears about a recession,' said Henry Allen, a macro strategist at Deutsche Bank AG, about this week's figures. Investors also seem reluctant to over-interpret data on a single day given the 'big test' is coming with Friday's US jobs report, he said. Long-dated Treasuries were slightly up after a sale of Japanese 30-year bonds wasn't as bad as many investors had feared. Still, US bonds lagged gains in European peers as investors remain concerned about the nation's widening deficits. The US 30-year yield fell two basis points to 4.86% on Thursday, but was still up more than 20 basis points since the start of May. The move follows Moody's Ratings stripping the nation of its last top-tier credit score and the US House of Representatives passing a multi-trillion dollar bill extending President Donald Trump's tax cuts. 'Fiscal concerns in the US will prevent any meaningful rally,' said Mohit Kumar, chief European strategist at Jefferies International. He expects 10-year yields to trade in a 4.25% to 4.75% range despite softening economic data. 'If we rally toward 4.25% in 10s we would use that opportunity to reset a short position.' --With assistance from Alice Atkins and Naomi Tajitsu. Cavs Owner Dan Gilbert Wants to Donate His Billions—and Walk Again YouTube Is Swallowing TV Whole, and It's Coming for the Sitcom Millions of Americans Are Obsessed With This Japanese Barbecue Sauce Is Elon Musk's Political Capital Spent? Trump Considers Deporting Migrants to Rwanda After the UK Decides Not To ©2025 Bloomberg L.P. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
