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Stocks rushed higher worldwide and oil prices eased Wednesday as hopes built that the war with Iran could end soon. That’s even though some of the signals investors saw as hopeful are already under dispute, and several earlier bouts of optimism in financial markets quickly got undercut by continued, fierce fighting in the war.
The S&P 500 rose 0.7 per cent and added to its leap from the day before, which was its best since last spring. That followed even bigger gains for stock markets across Europe and Asia, including an 8.4 per cent surge in South Korea, which were catching up to Wall Street’s rally from Tuesday.
The Dow Jones Industrial Average climbed 224 points, or 0.5 per cent, and the Nasdaq composite rallied 1.2 per cent.
Oil prices also fell back toward $100 US per barrel after U.S. President Donald Trump said late Tuesday that the military could end its offensive in two to three weeks.
That added to optimism following a couple tenuous signals of hope from earlier Tuesday onto which Wall Street latched, including a news report quoting Iran’s president as saying that it has “the necessary will to end the war” as long as certain requirements are met, including “guarantees to prevent a recurrence of aggression.”
Fears war could worsen inflation
The worry on Wall Street has been that the war may last a long time and keep oil and natural gas from the Persian Gulf out of global markets, which could create a brutal blast of inflation.
But hope has been quick to reverse to doubt on Wall Street, triggering manic swings back and forth for financial markets since the war began. Trump has also made statements that lifted markets, only to then increase his military threats, making those gains quickly disappear.
Shortly before Wall Street began trading on Wednesday, Trump claimed in a post on his social media network that Iran “has just asked the United States of America for a CEASEFIRE!”
WATCH | War in the Middle East upends supply chains:
“We will consider when Hormuz Strait is open, free, and clear. Until then, we are blasting Iran into oblivion or, as they say, back to the Stone Ages!!!”
But Iran’s Foreign Ministry spokesperson, Esmail Baghaei, quickly called that claim “false and baseless,” according to a report on Iranian state television.
Brent crude still up
The price for a barrel of Brent crude oil, the international standard, was sitting around $101 US following its declines, which is still up from roughly $70 before the war began.
U.S. gasoline prices rose again overnight to a national average of $4.06 US per gallon, according to the auto club AAA.
Iran, meanwhile, hit an oil tanker off the coast of Qatar and Kuwait’s airport on Wednesday while airstrikes battered Tehran as the fighting continued. Iran also continues to hold a grip on the Strait of Hormuz, where a fifth of the world’s traded oil passes during peacetime.
WATCH | Iran strikes Kuwaiti oil tanker:
Iran strikes fully laden Kuwaiti oil tanker off United Arab Emirates
Iran launched an airstrike on a fully loaded crude oil tanker at Dubai Port’s anchorage, setting it on fire and damaging its hull. The fire was extinguished, no injuries were reported and no oil was spilled, officials in Dubai said.
“De-escalation hopes have given markets a lift, but we think the effects of the war would, in many cases, persist even if the war did end soon,” Thomas Mathews, head of markets, Asia Pacific at Capital Economics, said in a research note Wednesday.
“It’s worth thinking through how markets might fare if the war were to end ‘very soon,”‘ he wrote. “Do markets have further to recover if sentiment continues to improve? The answer is almost certainly yes.”
The White House said Trump will deliver a public address Wednesday evening on the Iran war.
3 of every 5 S&P 500 stocks rose
On Wall Street, three out of every five stocks within the S&P 500 rose as Big Tech powered the move higher. Of them, Alphabet and Nvidia saw among the biggest increases.
Pharmaceutical giant Eli Lilly rallied 3.8 per cent after U.S. regulators approved its GLP-1 pill for weight loss.
Such gains have pulled the S&P 500, which sits at the heart of many 401(k) accounts in the U.S., back to within 5.8 per cent of its all-time high set early this year. Just on Monday, the index briefly neared a 10 per cent drop from its record, a steep enough fall that professional investors have a name for it: a “correction.”
Oil companies also fell with the price of crude. Exxon Mobil slumped 5.2 per cent, and Chevron dropped 4.6 per cent.
All told, the S&P 500 rose 46.80 points to 6,575.32. The Dow Jones Industrial Average added 224.23 to 46,565.74, and the Nasdaq composite climbed 250.32 to 21,840.95.
