U.S. stocks opened lower on Friday, while oil prices climbed back above $110 a barrel, as President Donald Trump’s extension to a key deadline for attacking Iranian energy infrastructure failed to soothe jittery investors.
At 09:32 ET (13:32 GMT), the benchmark S&P 500 index was down 0.7% to 6,428.75 points, the tech-heavy NASDAQ Composite slipped 0.8% to 21,246.70 points, and the blue-chip Dow Jones Industrial Average shed 0.8% to 45,593.56 points.
The main averages on Wall Street sank in the prior session, as uncertainty surrounded the trajectory of reported efforts to conclude the nearly month-old war in Iran.
Fighting has appeared to rage on unabated in the Middle East, leaving in place the effective closure of the Strait of Hormuz and the specter of air attacks on world-critical energy sites across the region. Israel and Iran traded strikes on Friday, while the Pentagon has been amassing resources in the Middle East ahead of what some market participants believe could be a U.S. ground incursion into Iran.
Trump’s Iran deadline extension
Trump announced late on Thursday that a White House deadline for Iran to reopen the Strait of Hormuz or face U.S. attacks on energy facilities would be extended until April 6.
In a Truth Social post, Trump claimed the extension came at the request of the Iranian government, adding that Tehran was engaged in “ongoing” talks with the United States that are “going very well.” Media reports to the contrary, he insisted, were “erroneous.”
Trump previously issued an ultimatum to Iran last weekend in which he vowed to strike power plants in the country’s if it did not unblock the Strait of Hormuz, a vital waterway through which roughly one-fifth of the world’s oil flows. Trump later said he would not do so until Friday after what he described as “very strong” discussions with Iran.
Tehran has publicly denied that any such negotiations with Washington are happening.
Diplomats from the Group of 7 nations are set to meet in France on Friday, with the White House’s calls for international aid to help unblock the Strait of Hormuz likely to dominate discussions. So far, those demands have largely been rebuffed.
Markets will also be looking ahead to the final University of Michigan consumer sentiment index for March, which could offer more insight into how American households expect to be impacted by the fighting in the Middle East.
Oil climbs
Crucially, the Strait of Hormuz remains effectively shuttered for tanker traffic and there is still the potential for further strikes on energy sites in the Persian Gulf.
This has amounted to a major disruption in supplies out of one of the world’s biggest energy-producing regions, depriving countries around the globe of imports needed in a range of industries.
The futures contract expiring in May for Brent crude, the global benchmark, was last up 2.7% to $110.88 a barrel. U.S. West Texas Intermediate crude futures also advanced 2.7% to $97.06 a barrel.
Brent is on pace for a decline over the past five-day period, although it has pared back much of a retreat logged earlier in the week which was underpinned by hopes for movement in peace discussions. The contract is also well above pre-war levels, fueling concerns over a spike in inflationary pressures.
Markets have in turn all but erased expectations for Federal Reserve interest rate reductions this year, and have even begun to contemplate possible borrowing cost hikes in the months ahead. Fed policymakers left rates unchanged at a meeting last week, but noted the threat of possibly accelerating inflation due to the energy shock.
Against this backdrop, benchmark U.S. Treasury yields jumped to their highest level since July on Friday. By 07:04 ET, the yield on U.S. 10-year Treasury notes had climbed to 4.46%, an uptick of roughly 5 basis points. On Thursday, the 10-year added 9 bps. Yields tend to move inversely to bond prices.
The U.S. dollar firmed, while gold advanced but was on pace for a one-week decline.
Sources : ( investing.com )