Stocks slide in Asia, Brent crude heads for monthly gains

The Financial Times on Sunday quoted President Donald Trump as saying the US could capture Kharg Island in the Persian Gulf, where Iran exports most of its oil, but also that a ceasefire could come soon.

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Pakistan said it was preparing to hold “meaningful talks” to end the war with Iran in the coming days, although Tehran had earlier accused Washington of preparing an attack on the country as the US military sent more troops to the region.

“Iran’s control of the Strait of Hormuz, the ability to disrupt the world’s energy and food markets, and the sustained capabilities of missiles and drones provide little incentive to believe, to pressure the US to increase,” said Madison Cartwright, a senior economist at the Commonwealth Bank of Australia.

“We expect the fighting to continue at least until June, and the risk is set for a prolonged conflict.”

The clampdown on the Strait has sent the prices of oil, gas, fertiliser, plastic and aluminum surging, as well as fuel for aircraft and ships. Prices of food, medicine and petrochemicals are all set to rise.

S&P 500 futures lost 0.7%, while Nasdaq futures fell 0.9%. For Europe, EUROSTOXX 50 futures and DAX futures both fell by 1.5%, while FTSE futures fell by 1.0%.

Brent crude rose 3.0% to $115.98 a barrel, bringing its gain for the month to 60% and rising since Iraq’s invasion of Kuwait in 1990. US crude rose 3.0% to $102.52, making it a month-on-month gain of 53%.

“With the Strait closed for a long time, a significant reduction in supply could trigger a significant increase in the price of crude oil, natural gas and other resources,” warned Bruce ‌Kasman, global head of economics at JPMorgan.

“The situation in which the Strait remains closed for an additional month will be consistent with oil prices rising to $150/bbl and restrictions on the customers of the energy supply industry.”

FED IN FOCUS AS PAYROLLS LOOM

Inflation worries have caused investors to upgrade the outlook for interest rates almost everywhere. Markets now suggest a 12-point rate hike by the Federal Reserve this year, compared to a 50-point rate cut last month.

Fed Chairman Jerome Powell will have the opportunity to present his views at an event later on Monday, and the influential head of the New York Fed, John Williams, is also speaking.

Data on US retail sales, manufacturing and earnings this week will provide information on how the economy is doing. Jobs are seen rising by 55,000 in March, following a decline of 92,000 in March, keeping unemployment at 4.4%.

In the European Union, figures on Tuesday are expected to show annual inflation rose to 2.7% in March from 1.9% last month, although core prices should fall.

The energy crisis, combined with pressure on budgets from higher borrowing costs and the need for more security spending, has depressed the sovereign bond market.

Ten-year US Treasury yields are up nearly 47 points for the month to date at 4.428%, while two-year yields are up 54 points.

Greater market stability tends to favor the US dollar as the world’s most liquid currency. The United States is also a net energy exporter, giving it a relative advantage over Europe and much of Asia.

The dollar was holding at 160.12 yen, while last week it crossed the 160 barrier for the first time since July 2024 when Japan intervened to support the currency.

The euro was stable at $1.1500, close to the March range of $1.1409.

In commodity markets, gold was down 1.0% at $4,445 an ounce, finding little support as a safe haven or hedge against inflation risks.

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