US stocks ended the first trading day of the week mixed, as markets reacted to conflicting signals regarding the conflict between the US and Iran. Meanwhile, the dollar strengthened amid increased demand for safe-haven assets.
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Geopolitics Keep Markets on Edge
All three major indexes opened higher, but the S&P 500 and Nasdaq failed to hold onto their gains. Market sentiment was influenced on one hand by optimism sparked by statements from US President Donald Trump about negotiations between the US and Iran, and on the other by renewed warnings to Tehran and the escalating conflict in the Middle East.
The Dow Jones Industrial Average rose by 49.50 points, or 0.1%, to 45,216.14. The broader S&P 500 fell by 25.13 points, or 0.39%, to 6,343.72. The tech-heavy Nasdaq declined by 153.72 points, or 0.73%, to 20,794.64.
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Mixed Signals and a Stronger Dollar
Trump said the US is engaged in serious talks with a “more reasonable regime” aimed at ending the war. However, he reiterated warnings that if the Strait of Hormuz is not reopened, the US could strike Iranian oil facilities and power plants. Iran dismissed the US peace proposals as unrealistic. “The government continues to send mixed signals,” said Rick Meckler, partner at investment firm Cherry Lane Investments. “When the news appears positive—at least to the extent that it’s believed—it supports the market. But anything suggesting a more aggressive stance leads to declines,” he added.
Investors are also focusing on how rising oil prices, which have surged since the start of the conflict, will impact the global economy. Markets received some support from comments by Federal Reserve Chair Jerome Powell, who said long-term inflation expectations appear stable and that the Fed does not yet need to decide how to respond to the latest developments. Analysts no longer expect the Fed to ease monetary policy this year, whereas before the conflict began, two rate cuts had been anticipated.Energy and technology stocks posted modest losses, while financial stocks performed better, Reuters reported.
The US dollar strengthened against a basket of currencies, supported by safe-haven demand linked to the Iran conflict. The United States, as a net energy exporter, is seen as being in a relatively stronger position than many other countries. However, the Japanese yen also gained as Japanese officials intensified warnings about potential market intervention. The dollar index, which tracks the greenback against a basket of six major currencies, rose 0.4% to 100.53. The euro weakened 0.4% to $1.1459. The dollar fell 0.4% against the yen to 159.69, while the euro declined 0.8% against the yen to 183.01.
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Source: ČTK
