Wall St recovers as Trump talks up Iran’s desire for peace

Stocks on Wall Street gained as investors clutched at signs of a lasting peace in the Middle East, with US President Donald Trump saying Iran still wants to make a peace deal, even as his blockade of the Strait of Hormuz comes into effect.

Tech stocks led gains among the major US indices, with beat-up Salesforce leading the Dow Jones Industrial Average higher in late trading, in what’s been a volatile period for software-as-a-service firms as rising interest rates undermine their valuations that are already in question over the potential impact artificial intelligence has on their operating models.

The latest corporate earnings season kicked off with Goldman Sachs reporting another record result, although the investment bank’s shares declined after its bond trading desk fell short of expectations, while French luxury giant LVMH Moët Hennessy Louis Vuitton fell short of forecasts weighed on the market for high-end goods.

Wall Street’s lead is set to carry through to the antipodes, with Australian futures pointing to a rally for the resources-heavy ASX when trading opens across the Tasman, while locally, Statistics New Zealand is due to release travel and migration data, and apple exporter Scales Corp will hold its annual meeting today.

Holding out hope

Brent crude oil futures fell 0.6% to US$98.72 a barrel at 7am in Auckland and stocks on Wall Street were generally stronger after US President Trump said Iran still wanted to make a peace deal as he ratcheted up pressure on the Islamic Republic with the blockade of the Strait of Hormuz, choking the flow of roughly 2 million barrels a day.

“Asset markets started the week under pressure after President Trump threatened to blockade the Strait of Hormuz in response to the collapse in talks with Iran,” Bank of New Zealand senior interest rate strategist Stuart Ritson said in a note. “S&P futures opened more than 1% lower yesterday, but risk appetite has recovered despite oil prices remaining higher than Friday’s level.”

Still, the volatility index, known as Wall Street’s fear gauge, nudged up 0.8% to 19.39, while the Polymarket prediction market is pricing in a 35% chance of a permanent peace between the US and Iran by the end of May and a 46% chance by the end of June.

Tech stocks drove gains on Wall Street, with the Nasdaq Composite up 0.8%, while the Dow rose 0.2%, with Salesforce, Microsoft and International Business Machines leading the blue-chip index higher. The S&P 500 advanced 0.6% in late trading.

Earnings season

Goldman Sachs kicked off the latest quarterly reporting from the major banks, reporting a record result on dealmaking and equities trading, Still, the stock was down 1.6% in late trading as its bond trading desk fell short of expectations, with a slowdown in interest rate trading mortgages and credit products.

Other banks were stronger on the day, with JPMorgan Chase, Morgan Stanley, Bank of America and Wells Fargo all gaining.

Meanwhile, LVMH declined after the luxury giant missed forecasts with weak first-quarter sales as the Middle East conflict sapped demand in the Persian Gulf.

Stocks in Europe were weaker, with France’s CAC 40 and Germany’s DAX both down 0.3%, while the UK’s FTSE 100 declined 0.2%.

Australian futures are following Wall Street’s lead, pointing to a 1.3% gain for the S&P/ASX 200 index when trading opens across the Tasman.

The kiwi dollar climbed to 58.73 US cents at 7am from 58.25 cents yesterday, while bond traders have now fully priced in a 25 basis point increase in the official cash rate at the July meeting after ANZ’s New Zealand economics team changed its forecast to add an increase that month, followed by two other increases this year.

Local data today include Stats NZ’s travel and migration figures for February, while Scales Corp holds its annual meeting in Christchurch today, where three directors are up for election and the board is seeking to expand its fee pool to accommodate its bigger ownership of its Australian Global Proteins joint ventures.

Turners Automotive Group is shedding rights to a 9 cents per share dividend today, while Fonterra farmers and fund investors will receive their capital return.

Reporting by Paul McBeth. Image from Mauro Shared Pictures on Unsplash.