Stocks pressured and oil rises as Hormuz reopen hopes fade
Asian equities mostly fell and oil extended gains Tuesday after President Trump rejected Iran’s seven-day Hormuz plan, with markets pricing another Federal Reserve rate hike in October.
What we know: Hopes for a quick reopening of the Strait of Hormuz faded after President Donald Trump rejected Iran’s seven-day truce offer over the weekend, AFP/France 24 reported. On Monday Trump denied an Axios report that he had offered sanctions relief and the release of frozen funds, writing on Truth Social: “I offered them NOTHING!” and calling the story a “HOAX.”
Wall Street Monday: All three major U.S. indexes closed lower. The Dow Jones Industrial Average fell 347.11 points, or 0.7 percent, to 51,481.51; the S&P 500 lost 0.77 percent to 7,683.69; and the Nasdaq Composite dropped 0.92 percent to 26,820.38, France 24 and The Business Times (Reuters) reported. The S&P’s decline was its largest daily percentage drop since Aug. 20, The Business Times said.
Asia and Europe Tuesday: Tokyo’s Nikkei 225 closed down 0.6 percent at 65,481.27; Hong Kong’s Hang Seng fell 0.5 percent; Shanghai’s Composite rose 0.2 percent; and London’s FTSE 100 was up 0.3 percent around 0810 GMT, France 24 reported. Seoul, Mumbai, Singapore and several other Asian markets were also down early.
Oil and rates: Around 0810 GMT, West Texas Intermediate was up 0.7 percent near $93.33 a barrel and Brent was up 0.8 percent near $106.16, France 24 reported. Average UK diesel prices hit a record high, according to the RAC motoring group. Markets are pricing a second successive Fed hike at the end of October as higher energy costs feed inflation worries.
Company color: Fast-fashion retailer Shein fell almost 14 percent at one point in Hong Kong after its first earnings report since its IPO, France 24 reported.
What this means: With Trump publicly rejecting Iran’s sequencing and denying reported offers of relief, traders are treating a near-term Hormuz reopen as less likely — and treating stickier oil-driven inflation as more likely to keep the Fed on a hiking path.