US stocks are priming for a rough session on Monday after the S&P 500 Index, a measure of broader market performance, hit new records in four out of the five sessions of the previous week.
Rising for three consecutive index, the index gained 4.5% for the week, with the upside primarily premised on a resolution to the US-Iran war. In the process, the index wiped away all of its post-conflict losses.
What Dented Sentiment: The U.S. seized an Iranian cargo ship in the Gulf of Oman on Sunday, casting clouds on the hopes of an immediate resolution that the market was anticipating.Posting on Truth Social, Trump said, “Today, an Iranian-flagged cargo ship named TOUSKA, nearly 900 feet long and weighing almost as much as an aircraft carrier, tried to get past our Naval Blockade, and it did not go well for them.”
The U.S. President said the U.S. Marines have custody of the vessel. “We have full custody of the ship, and are seeing what’s on board!”
Reacting to the development, Iran’s President Masoud Pezeshkian told Pakistan, which has been serving as the interlocutor between the two warring nations, that the naval blockade of Iran is a clear violation of the ceasefire understanding and contrary to the UN Charter. “Iran is fully determined to defend its sovereignty against any renewed U.S. and Israeli regime adventurism,” he added.
https://x.com/Iran_GOV/status/2045968492294545662
Iran’s Foreign Ministry Spokesperson Esmaeil Baqaei also relayed the same view in a post on X.
Peace Talks in Doubt: While Trump said on Truth Social that his representatives would go to Islamabad for a second round of talks, Iran has signaled a conditional approach. Head of Iranian Parliament’s National Security Committee Ebrahim Azizi reportedly told Al Jazeera that Iran has decided to continue talks but this does not mean to negotiate at any cost.
“Perhaps today or tomorrow, with further assessment, we consider it likely, providing that the American negotiating team and the messages they have received give a positive signal,” Azizi said, when asked whether Iran would send a team to Pakistan.
Iran has set red lines, and these “must be observed, he added.
Stock Futures Pullback: The ES futures contract traded moderately lower in the Asian session as traders await updates on the conflict.
ES Futures (1-Day Chart)
Source: TradingView
The S&P 500’s recent record run has been fueled by the tech rally, with the Magnificent Seven stocks up about 20% since March 30 bottom. These companies are due to announce their first-quarterly results over the next two weeks, with electric-vehicle (EV) giant Tesla due to report Wednesday after the market closes.
The U.S. economic calendar for the day is very light, with only Treasury auctions of 3-month and 6-month bills scheduled.
The major Asian traded mixed on Monday, with the Japanese and Hong Kong markets advancing, while the markets elsewhere traded on a lackluster note.
Crude Resumes Rally: The West Texas Intermediate (WTI) grade crude oil futures (CL) rose about 6% Monday morning after plunging nearly 10% Friday, due to the escalation in the Persian Gulf. The Strait Hormuz was reportedly closed once again to commercial shipments, reigniting supply concerns.
The ICE-traded Brent crude futures contract also climbed 5.50% to over $95 per barrel.
