Markets face a sobering Monday after weekend optimism over a peace talks breakthrough faded. Investors are bracing for a high-impact week shaped by geopolitics, inflation data and the start of earnings season.
Oil prices resumed their climb, with international benchmark Brent crude and the US benchmark WTI trading above $100 a barrel. On Monday morning in Europe, Brent front-month futures were up 7%, trading at nearly $102 a barrel, while WTI gained nearly 8% and surged to $104.
This comes as the US military prepares to blockade ships entering or leaving the Strait of Hormuz, where much of the shipping has been disrupted by Iran since the start of the war.
US President Donald Trump announced the planned blockade after US-Iran ceasefire talks in Pakistan ended without agreement. The military said the blockade covering all Iranian ports would begin Monday at 10 am CET (5:30 pm local time in Iran).
Oil prices have been climbing as shipping through the Strait has essentially stalled since late February. Brent crude has risen from roughly $70 a barrel before the war to more than $119 at times.
“Markets have seen a clear risk-off move this morning,” a Deutsche Bank Research analysts said in a note, adding that “the mood has shifted negatively once again.
“Oil prices have revived fears of a stagflationary shock, with equities and bonds losing ground globally.
Hungarian election and the forint
The Hungarian forint took the spotlight in currency trading after Péter Magyar and his Tisza Party won a landslide election, ending the 16-year rule of Viktor Orbán’s Fidesz party.
The euro was trading at 366.18 forints before European markets opened on Monday, a sharp drop from 377.56 late Sunday. The Hungarian stock index rose 2.85% on Monday morning, bucking the negative sentiment weighing on markets across the bloc.
Investors see Magyar’s Tisza Party pushing Hungary in a more pro-EU direction, with a higher likelihood of restoring rule-of-law alignment and closer cooperation with Brussels.
Elsewhere in currency markets, the euro weakened against the dollar to $1.1692 in European morning trading. The British pound also fell against the dollar, down 0.3% at $1.3416.
Stock markets face a turbulent session
Stock markets in Europe opened in negative territory, with London’s FTSE 100 opening down 0.4%, the DAX in Frankfurt falling 1%, and Paris’s CAC 40 down nearly 0.9%.
Stock markets were also down in Asia on Monday. Japan’s benchmark Nikkei 225 lost 1.0% in morning trading to 56,357.40. Australia’s S&P/ASX 200 shed 0.5% to 8,913.50. South Korea’s Kospi dipped 1.1% to 5,795.15. Hong Kong’s Hang Seng slipped nearly 1.5% to 25,513.42, while the Shanghai Composite fell 0.2% to 3,976.57.
Analysts said global trading was expected to remain turbulent for some time.
“The outcome of the talks was not really what people were hoping for, that’s for certain,” Neil Newman, Managing Director and Head of Strategy at Astris Advisory Japan, said in Hong Kong.
“As we stand here at the moment, it doesn’t look very nice. Certainly, the oil prices are a big concern.”
Wall Street ended last week with a second weekly gain in a row. The S&P 500 inched 0.1% lower on Friday after a day of choppy trading.
The Dow Jones Industrial Average fell 0.6% and the Nasdaq Composite rose 0.4%. But those gains came amid optimism over weekend peace talks in Pakistan that was later shattered by subsequent developments.
The yield on the 10-year Treasury climbed to 4.32% last Friday from 4.29% late Thursday.
In currency trading, the US dollar gained to 159.74 Japanese yen from 159.25 yen. The euro cost $1.1687, down from $1.1729.
What markets are watching this week
Markets are entering a busy week, with all eyes still on developments around the Strait of Hormuz and the broader implications of the Iran conflict.
In the US, investors are watching the first major wave of corporate earnings reports, including those of big banks and tech companies, with JPMorgan, Goldman Sachs and Bank of America, ASML and TSMC reporting this week.
This is set against a backdrop of key US inflation and producer price data, as well as jobless claims. These figures are critical for gauging whether the Federal Reserve is moving closer to rate cuts.
Meanwhile, the IMF–World Bank Spring Meetings in Washington begin this week.
The latest World Economic Outlook from the IMF, out on Tuesday, will also be of interest, and could offer further insight into how these institutions are assessing the global economy’s resilience amid geopolitical tensions in the Middle East.
In Europe, investors are focused on PMI and industrial activity data, which will provide insight into whether the eurozone economy is stabilising or still struggling with weak demand.