Bangkok | Oil prices climbed more than 5 per cent, and Wall Street veered toward losses before the opening bell Monday as a standoff between Iran and the US prevented tankers from using the Strait of Hormuz.
Futures for the S&P 500 also fell 0.5 per cent while futures for the Dow Jones Industrial Average slid 0.6 per cent. Nasdaq futures were also off by 0.5 per cent.
The Persian Gulf's Strait of Hormuz — a passageway for 20 per cent of the world's oil — was closed again after Iran reversed a decision to reopen the strait and President Donald Trump said a US Navy blockade of Iranian ports remains in effect.
US benchmark crude gained USD 5.18, or 6.3 per cent, to USD 87.88 a barrel. Brent crude, the international standard, gained 5.3 per cent at USD 95.20 a barrel.
President Donald Trump said Sunday that the US had seized an Iranian-flagged cargo ship that tried to get around a naval blockade. Iran's joint military command said Tehran would respond soon and called the US seizure an act of piracy.
A fragile, two-week ceasefire between the US and Iran is set to expire on Wednesday, while escalating tensions in the Strait of Hormuz fueled pessimism over new talks to end the war.
Since the war began, market sentiment has swung wildly. A strong start to the earnings reporting season for big US companies has helped support stocks.
“The problem for markets is not the absence of hope; it is the overpricing of it,” Stephen Innes of SPI Asset Management said in a commentary. “The latest move higher in equities has started to feel less like conviction and more like momentum feeding on itself.”
In equities trading early Monday, building insulation maker and distributor TopBuild jumped nearly 19 per cent on news that it was being acquired by building materials company QXO for USD 17 billion, according to media reports. QXO shares dipped more than 4 per cent.
Airline stocks tumbled again, as they tend to when oil prices jump. American and Delta both fell 2.6 per cent while United fell 3.2 per cent. United may have taken the bigger hit after American shot down the notion of a merger with its rival, which was reportedly floated by United's CEO last week at the White House.
On Friday, oil prices had dropped back to where they were in the early days of the Iran war, and US stocks raced to a fresh record after Iran said the strait was open again for commercial tankers carrying crude from the Persian Gulf to customers worldwide.
A freer flow of oil could relieve pressure on prices for gasoline and all kinds of other products that get moved by vehicles. It could even ultimately help people pay less on credit-card interest and mortgage bills.
At midday in Europe, Germany's DAX lost 1.4 per cent, and the CAC 40 in Paris shed 1.1 per cent. Britain's FTSE 100 fell 0.7 per cent.
Despite renewed doubts about how soon ships will again transport the vast amounts of oil the world gets from the Middle East, share prices were mostly higher in Asia, though they gave up the bigger gains of earlier in the session.
In Tokyo, the Nikkei 225 rose 0.6 per cent to 58,824.89, while South Korea's Kospi picked up 0.4 per cent to 6,219.09.
Hong Kong's Hang Seng added 0.8 per cent to 26,361.07, and the Shanghai Composite index advanced 0.8 per cent to 4,0802.13.
Australia's S&P/ASX 200 edged 0.1 per cent higher to 8,953.30.
In Taiwan, the Taiex jumped 0.4 per cent. India's Sensex rose 0.1 per cent, and the SET in Bangkok lost 0.2 per cent.
