US stock markets rose over the weekend as President Donald Trump announced that negotiations with Iran 'ended,' though expectations of continued behind-the-scenes dialogue drove oil prices lower. WTI crude traded at $71 per barrel and Brent crude at $76 per barrel. Analysts at Pepperstone and Citi stated that markets no longer react significantly to geopolitical tensions themselves, with oil markets now focusing on supply changes rather than conflict-related headlines.
Pepperstone and Citi Say Markets Shift Focus from Geopolitical Headlines to Supply Fundamentals
Pepperstone and Citi analysts explained that oil markets will concentrate on changes in crude supply rather than conflict-related headlines, with prices expected to continue a downward stabilization trend unless significant supply disruptions occur. BCA Research noted that the current level of military confrontation is much lower than in March or before the ceasefire, with no substantial developments that would push either side back to those levels.
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SK Hynix entered the Nasdaq and closed at $168, up 13% from its IPO price of $170. Nvidia, a key partner of SK Hynix, rose 4% on expectations of sustained semiconductor demand. The Philadelphia Semiconductor Index climbed for the third consecutive trading session.
Iran Threatens Hormuz Blockade Until Further Notice as US Conducts Large-Scale Airstrikes
Over the weekend, Middle East tensions escalated as Iran threatened to blockade the Strait of Hormuz until further notice, prompting the US to conduct large-scale airstrikes. While Wall Street cautiously suggested no larger attacks are expected, both sides' movements this week require monitoring.
Treasury Yields Rise to 4.21% and 4.56% as Dollar Index Holds Near 101
Despite falling oil prices, Treasury yields and the dollar index rose on persistent inflation concerns. The 2-year Treasury yield reached 4.21% and the 10-year yield climbed to 4.56%. The dollar index continued to trade near the 101 level. An Evercore ISI survey of institutional investors identified inflation as the biggest threat to the current stock market. Charles Schwab pointed to structural issues preventing interest rates from declining easily, citing massive US fiscal deficits and a resilient economic foundation.
Fed Cites War and Tariffs as Inflation Drivers While Morgan Stanley Names Three Market Risks
The Federal Reserve expressed optimism about US economic growth and productivity while identifying war, tariffs, and 'chipflation' as the main drivers of inflation over the past year. The Fed stated it is 'ready to take strong action at any time if signs of renewed price increases appear.' Morgan Stanley forecasted a bull market while maintaining caution, naming three potential market landmines: the possibility of additional rate hikes within the year, the scale of hyperscaler AI investments, and the resurgence of Middle East conflicts.
FAQ
What caused US stock markets to rise over the weekend despite Trump's announcement on Iran?
US stock markets rose as expectations of continued behind-the-scenes dialogue between the US and Iran drove oil prices lower, with WTI crude trading at $71 per barrel and Brent crude at $76 per barrel. Analysts stated that markets now focus on supply changes rather than geopolitical headlines.
Why did Treasury yields rise even as oil prices fell?
Treasury yields rose to 4.21% for 2-year notes and 4.56% for 10-year notes despite falling oil prices because inflation concerns remain persistent. Charles Schwab cited structural issues including massive US fiscal deficits and a resilient economic foundation that prevent interest rates from declining easily, even when oil prices drop.
