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The U.S. stock market and oil prices are holding relatively steady Tuesday, for now, following their stunning swings up and down since the war with Iran began.
The S&P 500 edged down 0.1 per cent in early trading, a day after careening from a sharp early loss to a solid gain by the end of trading. The Dow Jones Industrial Average was down 34 points, or 0.1 per cent, as of 9:35 a.m. ET, and the Nasdaq composite was 0.1 per cent higher.
Calm was also holding in the oil market, which has been the centre of action for financial markets because of worries about the potential for long-term disruptions to the energy industry in the Middle East.
The price for a barrel of Brent crude, the international benchmark, was sitting at $91.81 US. That’s down 7.2 per cent from its settlement price the day before, but much of that decline happened before the end of Wall Street’s trading day on Monday.
A barrel of benchmark U.S. crude was also sitting close to where it was during the last moments of Monday’s trading for the U.S. stock market, and it was at $88.57 US.
On Monday, markets swung from big losses to finish the day with gains, while oil prices neared $120 US per barrel before falling back to about $90.
Helping to assuage investors’ fears, U.S. President Donald Trump told CBS News on Monday that he thinks “the war is very complete, pretty much.”
However, Trump also made other somewhat contradictory comments that seemed to threaten intensified action against Iran if it makes any “attempt to stop the globe’s oil supply.”
Iran launched new attacks on Tuesday at Israel and Gulf Arab countries, keeping pressure on the Middle East in a war started by Israel and the United States 10 days ago that has sent oil prices surging.
WATCH | War in Middle East roils oil prices:
Oil prices see major volatility from war in Middle East
The ongoing uncertainty for the global oil supply because of the U.S.-Israel war with Iran caused a volatile day for markets on Monday, with oil prices skyrocketing in the morning only to tumble back down later in the day.
There is a great deal of uncertainty about just how high oil prices will go and how long they will stay there because of disruptions to Middle East energy facilities.
If oil prices stay very high for very long, household budgets already stretched by high inflation could break under the pressure. Companies would see their own bills jump for fuel and to stock items on their store shelves or in their data warehouses.
Concerns have focused on the Strait of Hormuz, a narrow waterway off Iran’s coast that a fifth of the world’s oil sails through on a typical day. Iran has threatened to set fire to ships sailing the strait.
Global shares rebound
Global shares rebounded Tuesday from their sharp declines a day before.
France’s CAC 40 added 2.1 per cent in early trading, while Germany’s DAX surged 2.5 per cent. Britain’s FTSE 100 gained 1.7 per cent.
In Asia, Tokyo’s benchmark Nikkei 225 added 2.9 per cent to finish at 54,248.39 after the government released revised economic data that showed Japan’s economy grew slightly faster than initially estimated in the final quarter of last year, boosted by solid business investments.
Japan’s economy expanded at an annual pace of 1.3 per cent. The initial estimate was a much weaker 0.2 per cent.
“Today is the rebound, obviously positive comments from President Trump overnight, we’re starting to see the light at the end of the tunnel for the war,” said Neil Newman, a managing director and head of strategy at Astris Advisory Japan.
“So volatility is going to remain with us but things are certainly looking a lot brighter today,” he said.
WATCH | Strait of Hormuz a critical choke point:
Why the Strait of Hormuz closure raises the price at the pump
Almost 20 per cent of the world’s oil supply passes through the Strait of Hormuz, so with Iran forbidding any navigation through it, supply drops and the price for oil and petroleum products such as gas goes up for everyone, everywhere.
Australia’s S&P/ASX 200 gained 1.1 per cent to 8,692.60. Hong Kong’s Hang Seng added 2.2 per cent to 25,959.90, while the Shanghai Composite index rose 0.7 per cent to 4,123.14.
South Korea’s Kospi, where extremely volatile trading set off two circuit breakers in the past week, including Monday, rose more than 5 per cent Tuesday.
In currency trading, the U.S. dollar rose to 157.78 Japanese yen from 157.67 yen. The euro was trading at $1.1646, up from $1.1636.