Jamie McGeever
8 min read
In This Article:
By Jamie McGeever
ORLANDO, Florida (Reuters) - TRADING DAY
Making sense of the forces driving global markets
By Jamie McGeever, Markets Columnist
Stocks flew, oil sank, and bond yields tumbled on Monday in a highly volatile start to the week, as traders digested Iran's response to the U.S. strikes on its nuclear sites and a string of dovish remarks from Federal Reserve officials.
In my column today I ask a simple question, one which has several plausible answers: Who's selling the dollar? More on that below, but first, a roundup of the main market moves.
If you have more time to read, here are a few articles I recommend to help you make sense of what happened in markets today.
1. Strikes on Iran mark Trump's biggest, and riskiest,foreign policy gamble 2. Iran oil doomsday in Hormuz may be more fear thanreality: Bousso 3. Shrieks and shrugs meet alarming U.S. debt pile: MikeDolan 4. Equity investors seeking clarity should be careful whatthey wish for: Klement 5. Trump, U.S. Senate Republicans face test as 'BigBeautiful Bill' deadline looms
Today's Key Market Moves
* Oil prices close 7.2% lower in a whirlwind session, havingbeen up 6% and at a five-month high above $81/bbl at the open.That's the biggest one-day fall since August 2022. * Tesla is the biggest gainer on the S&P 500, rising 8%after the electric-vehicle maker started testing itslong-awaited robotaxi service. Shares have leaped 30% in justover two weeks. * Wall Street closes up across the board, with the big threeindices gaining around 1%. World stocks also end higher,rebounding from a three-week low earlier in the day. The MSCIWorld rises 0.4%. * The dollar goes the opposite way, ending around 0.3%lower after having nudged a three-week high earlier in the day. * U.S. bond yields fall after the Fed's Michelle Bowman saysa rate cut as soon as July is possible. Curve bull steepens,with shorter-dated yields falling as much as 9 bps intraday.
All aboard the 'risk on' rollercoaster
Early on Monday, oil prices were up 6% at a five-month peak on fears that Iran could seriously disrupt global crude supplies by closing the Strait of Hormuz. Several Middle East countries closed their airspace, and the dollar was rallying strongly.
The reversal by the close of U.S. trading was remarkable - oil fell 7% and broke below its 200-day moving average, stocks closed firmly in the green and the dollar ended lower. What was the catalyst?
There were probably two.
The first was Tehran's response to Washington's attacks on its nuclear facilities on Saturday. Iran attacked a U.S. military base in Qatar, but took no action to disrupt oil and gas tanker traffic through the Strait of Hormuz.
