Stocks mixed, oil steadies on guarded optimism for Iran ceasefire

AFP | London

Email: mail@newsofbahrain.com

Stock markets were mixed and oil prices steady yesterday with investors cautiously optimistic about the USIran ceasefire holding, and as a US inflation report was not as bad as feared.

A cloud of uncertainty hung Friday over the scheduled start of talks in Pakistan this weekend to turn a shaky two-week truce into a lasting accord that would reopen the key Strait of Hormuz.

But there has been no announcement yet on the arrival of negotiators and both sides have accused the other of failing to properly implement the ceasefire.

"Investors remained cautious as they kept a close eye on developments surrounding the fragile ceasefire between the US, Israel and Iran," said David Morrison, an analyst at Trade Nation, adding that investors were pausing "to catch their collective breath heading into the weekend".

The main international oil contracts were up around 1%, holding just under $100 a barrel even as only a trickle of tankers have so far transited the Strait of Hormuz, where a fifth of the world's oil passes in normal times.

Some two hours into trading on Wall Street the main US indices were mixed as the Dow stood off 0.3%  while the broader S&P 500 and the tech-heavy Nasdaq were barely in the green.

In Europe, London and Frankfurt closed virtually flat as Paris added 0.2%.

New York shares had rebounded late Thursday on news that Israel and Lebanon had agreed to talks, upping the chances for the ceasefire after five weeks of fighting.

But despite this week's rebound, stock markets remain lower and oil prices significantly higher than before the war -- though oil was flat Friday after weeks of gyrations.

Investors were also watching US inflation and the prospects for interest rates in the world's largest economy as the Gulf war sends economic shock waves through myriad sectors.

US consumer prices rose 3.3% in March from a year earlier, according to data released Friday, and while that was up sharply from the previous month as gas prices surged, it was below what some economists expected.

White House spokesperson Kush Desai responded by saying the US economy "remains on a solid trajectory."

Core inflation, which strips out volatile categories like food and energy, rose 2.6% from a year ago, again lower than what some analysts had feared.

A higher rate might have ruled out any interest rate cuts from the Federal Reserve for several months.

"Although core inflation was seemingly subdued in March, the concern is that the energy price shock will bleed through more to core inflation in April," said Patrick J. O'Hare, an analyst at Briefing.com.