Stocks rise, bonds steady, oil on track for record monthly gains

The US and  European shares rose on Tuesday but were still on track for their worst month since 2022, while oil prices were set for a ‌record monthly increase, as traders came to the end of a tumultuous March dominated by the Iran war.  Still, markets got a lift from a Wall Street Journal report that Trump had told aides he is willing to end the military campaign even if the strait remains largely closed.

US stocks are bouncing back on Tuesday as the spike for oil prices because of the war with Iran slows.

The S&P 500 jumped 1.2%, a day after it fell more than 9% below its all-time high set early this year. The Dow Jones Industrial Average was up 400 points, or 0.9%, as of 9:35 a.m. Eastern time, and the Nasdaq composite was 1.6% higher.

The rebound came as steadying oil prices took some pressure off Wall Street. The price for a barrel of Brent crude oil, the international standard, inched down by less than 0.1% to $107.37. Benchmark US crude rose 0.7%.

Oil prices have been dictating the US stock market’s sharp swings since the war began, with Brent shooting from roughly $70 per barrel to as high as $119 at times. The worry is that the war may last a long time and keep oil and natural gas from the  Gulf out of global markets, which could create a brutal blast of inflation.

 The war, which began with the US and Israel launching coordinated strikes against Iran on February ‌28, has sent shockwaves across global markets and raised the risk of a worldwide recession. At 1119 GMT, Europe’s STOXX 600 was up 1% ⁠on the day, as was the FTSE 100. But the STOXX 600 remained on track for its steepest monthly loss since June 2022, a break from its previous eight months in a row of gains.

US stock futures also rose, with S&P 500 and Nasdaq e-minis both up around 1% on the day .

Equity markets are “taking the US administration at their word, that they’re going to end the war,” said Colin Graham, head of multi-asset strategies at Dutch asset manager Robeco.

“They haven’t moved to day-two where the Strait of Hormuz could still be closed.” As ​prices were moved by contradictory reports about the US plans, interpreting Tuesday’s moves was complicated by it being the last ‌day of the month and quarter, when large asset managers typically rebalance their portfolios back to their target allocations.

Brent crude futures were up 2.4% on the day at $115.50 a barrel , on track for their biggest monthly gain on record, and US West Texas Intermediate ⁠futures were up 1.4% at $104.34 .

Oil prices have surged as a result of the war, due to Iran’s effective closure of the Strait of Hormuz, which carries about a fifth of the world’s oil supply. The average US retail price of gasoline hit $4 a gallon on Monday. The oil shock meant ​euro zone inflation ‌soared past the European Central Bank’s 2% target in March, data showed.

Eurozone government bond yields were steady, with the German 10-year ‌yield at 3.0292%. Government bond yields had retreated from multi-year highs on Monday after rising sharply this month because of the conflict, with investors appearing to refocus on the risk of weaker growth stemming from the energy shock. The European Union’s energy chief has told governments to prepare for “prolonged disruption” to energy markets ‌as a result of ‌the war, ahead of an emergency meeting on Tuesday.

“If the Strait ⁠of Hormuz remains closed for the next week or two, then I think we’ll be raising our probabilities ‌of recession in our scenario analysis,” Robeco’s Graham said, adding that this was not yet the case.

Developed market currencies were broadly steady, but the dollar was still on track for its biggest monthly gain since July, having held up as ⁠a safe-haven currency. The euro was up 0.1% at $1.1474, still on track for its worst month since July. Japan’s finance minister said ​that the government was ready to respond “on all fronts” against foreign exchange volatility, underscoring Tokyo’s alarm over the yen’s recent slide. Gold was up 1.5%, at $4,578.67, on track for its biggest monthly drop since 2008. Goldman Sachs said it continued to expect ⁠gold prices will reach $5,400 per troy ounce by end-2026.

Analysts said optimism entered markets overnight following a report from The Wall Street Journal saying President Donald Trump told aides he’s willing to end the US military campaign against Iran even if the Strait of Hormuz remains largely closed. The strait is a narrow waterway off Iran connecting the Persian Gulf to the open ocean, and a fifth of the world’s oil sails through it on a typical day.

To get the strait open, Trump could try diplomatic talks with Iran and then push allies in Europe and the Gulf to take the lead, according to the report.

On his social media network, Trump on Tuesday morning urged the United Kingdom and other countries to “build up some delayed courage, go to the Strait, and just TAKE IT.” Trump’s own words have become less impactful for financial markets, after he touted what he called productive talks with Iran over the last week, only to turn around and threaten the “obliteration” of Iranian power plants.

Oil prices have already shot high enough that inflation in Europe accelerated to 2.5% in March, up from February’s 1.9%.

Agencies