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London Quick Take - Thursday - Stocks rise amid mixed news on Iran-US conflict
Neil Wilson
Investor Content Strategist
Note: This is marketing material. This article is not investment advice, capital is at risk.
Today, European stock markets turned positive on reports Iran could be willing to abandon its nuclear programme, though gains are muted following a weak open before the reports, per Iran's deputy foreign minister, emerged. Crude oil is firmer, but off the highs of the session, likewise gas prices. This remains a highly volatile and dangerous situation and it seems surprising at the willingness for equities to rally in this environment.
Yesterday, stocks bounced back with the DAX +1.75%, FTSE 100 +0.80%, CAC +0.8% as the narrative shifted and some of the flurry of de-risking of popular trades faded. Dutch TTF gas fell 10%; a clear sign of easing worries. I’m not convinced that this is the end of the volatility however, with the risk of escalation and ongoing pressure on global trade and energy flows still elevated and likely to become more of a focal point the longer this drags. Equity indices opened lower Thursday with the FTSE -0.2% and DAX and CAC down about –0.6% at the open before turning higher post the Iran deputy foreign minister report. US futures are down after the cash equity indices rose yesterday. Overnight Asian markets rallied with South Korea +10% as the country activated its Covid-era market stabilisation fund following a steep selloff over the last two days. One policymaker in Seoul warned the conflict could disrupt production of semiconductors...Crude trades higher this morning which could be a weight on the rebound we saw yesterday, while Dutch TTF gas +7% after yesterday’s drop. As per yesterday this is hardly the time to be confident about a recovery. Now is the time to keep powder dry.
Wall Street rose with the S&P 500 +0.8%, Dow Jones +0.5% and Nasdaq Composite gaining +1.3% with chip stocks showing notable strength as Micron, AMD, Broadcom and Nvidia all rose. Oil markets declined as traders checked signs that the conflict was not radically getting worse, and some strong economic data releases supported risk sentiment. Labour market concerns eased with a decent ADP jobs report, while the services PMI from the US was stronger than expected with inflation pressures easing. Consumer discretionary stocks led gains with their best advance since October with Ross Stores advancing 7%. AI retail favourite CoreWeave rose 8% after announcing a deal with Perplexity. Tesla got a lift as Bank of America initiated coverage and upgraded the stock to a ‘Buy’. Crypto stocks put in a big shift higher as Bitcoin rallied from being more beaten down than most and Trump sided with crypto firms in their battle with the big banks over stablecoin yield.
Broadcom rallied +5% after the close as it beat on earnings and revenues and issued better-than-expected guidance for the current quarter. FY Q1 revenues +29% to $19.31bn with AI revenues +106% on demand for AI accelerators and AI networking, while projected revenue of $22bn in the fiscal second quarter was well ahead of consensus estimates.
We had a flurry of updates yesterday that seemed to steady some nerves– not least one report that Iran had reached out to the US to end the war, later refuted. There is no sense that this is ending soon and headlines suggesting resolution seem to have disproportionate impact on market action.
President Trump’s recently announced 15% global tariff will take effect this week, rising from its current rate of 10%, according to Treasury Secretary Scott Bessent. He also said that Washington would launch a series of measures aimed at protecting oil shipments through the Persian Gulf. “We have a series of announcements that we’re going to be making,” Bessent said on CNBC. “We began yesterday with the announcement that DFC will provide the insurance for both the crude carriers and the cargo ships operating in around the Gulf over the weekend.” Meanwhile the US Senate rejected a war powers resolution that would have limited the President’s ability to carry out more strikes on Iran.
Tanker traffic through the Strait of Hormuz is down by 90% from usual levels, indicating it’s all but closed to shipping. Maersk says it temporarily suspended cargo bookings for several Gulf countries because of the “the evolving situation in the Middle East”. The halt affects the United Arab Emirates, Oman (except the port of Salalah), Iraq, Kuwait, Qatar, Bahrain, and a number of Saudi ports. One Chinese bulk carrier ship designed for carrying crude did transit the Strait.
Yesterday, stocks bounced back with the DAX +1.75%, FTSE 100 +0.80%, CAC +0.8% as the narrative shifted and some of the flurry of de-risking of popular trades faded. Dutch TTF gas fell 10%; a clear sign of easing worries. I’m not convinced that this is the end of the volatility however, with the risk of escalation and ongoing pressure on global trade and energy flows still elevated and likely to become more of a focal point the longer this drags. Equity indices opened lower Thursday with the FTSE -0.2% and DAX and CAC down about –0.6% at the open before turning higher post the Iran deputy foreign minister report. US futures are down after the cash equity indices rose yesterday. Overnight Asian markets rallied with South Korea +10% as the country activated its Covid-era market stabilisation fund following a steep selloff over the last two days. One policymaker in Seoul warned the conflict could disrupt production of semiconductors...Crude trades higher this morning which could be a weight on the rebound we saw yesterday, while Dutch TTF gas +7% after yesterday’s drop. As per yesterday this is hardly the time to be confident about a recovery. Now is the time to keep powder dry.
Wall Street rose with the S&P 500 +0.8%, Dow Jones +0.5% and Nasdaq Composite gaining +1.3% with chip stocks showing notable strength as Micron, AMD, Broadcom and Nvidia all rose. Oil markets declined as traders checked signs that the conflict was not radically getting worse, and some strong economic data releases supported risk sentiment. Labour market concerns eased with a decent ADP jobs report, while the services PMI from the US was stronger than expected with inflation pressures easing. Consumer discretionary stocks led gains with their best advance since October with Ross Stores advancing 7%. AI retail favourite CoreWeave rose 8% after announcing a deal with Perplexity. Tesla got a lift as Bank of America initiated coverage and upgraded the stock to a ‘Buy’. Crypto stocks put in a big shift higher as Bitcoin rallied from being more beaten down than most and Trump sided with crypto firms in their battle with the big banks over stablecoin yield.
Broadcom rallied +5% after the close as it beat on earnings and revenues and issued better-than-expected guidance for the current quarter. FY Q1 revenues +29% to $19.31bn with AI revenues +106% on demand for AI accelerators and AI networking, while projected revenue of $22bn in the fiscal second quarter was well ahead of consensus estimates.
We had a flurry of updates yesterday that seemed to steady some nerves– not least one report that Iran had reached out to the US to end the war, later refuted. There is no sense that this is ending soon and headlines suggesting resolution seem to have disproportionate impact on market action.
President Trump’s recently announced 15% global tariff will take effect this week, rising from its current rate of 10%, according to Treasury Secretary Scott Bessent. He also said that Washington would launch a series of measures aimed at protecting oil shipments through the Persian Gulf. “We have a series of announcements that we’re going to be making,” Bessent said on CNBC. “We began yesterday with the announcement that DFC will provide the insurance for both the crude carriers and the cargo ships operating in around the Gulf over the weekend.” Meanwhile the US Senate rejected a war powers resolution that would have limited the President’s ability to carry out more strikes on Iran.
Tanker traffic through the Strait of Hormuz is down by 90% from usual levels, indicating it’s all but closed to shipping. Maersk says it temporarily suspended cargo bookings for several Gulf countries because of the “the evolving situation in the Middle East”. The halt affects the United Arab Emirates, Oman (except the port of Salalah), Iraq, Kuwait, Qatar, Bahrain, and a number of Saudi ports. One Chinese bulk carrier ship designed for carrying crude did transit the Strait.
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