PrintGLOBAL MARKETS-Wall Street stocks flourish, oil dives below $90 after Iran says Strait of Hormuz is open
BY Reuters | TREASURY | 11:05 AM EDT* Iranian Foreign Minister says Strait open while ceasefire in place
* Brent tumbles below $90
* Wall Street advances in the wake of European gains
* Treasury yields fall, dollar slides
*
By Isla Binnie and Alun John
NEW YORK/LONDON, April 17 (Reuters) - Wall Street stocks followed global indexes higher and the price of oil tumbled more than 11% on Friday after Iran's foreign minister said that the Strait of Hormuz was open for passage while a ceasefire in the seven-week-old war launched by the U.S. and Israel is in force.
Abbas Araqchi said in a post on X that passage for all commercial vessels through the Strait of Hormuz, a key conduit for global energy flows, was declared completely open for the remaining period of the ceasefire, in line with a ceasefire in Lebanon.
Benchmark Brent crude futures nosedived to $87.94 a barrel, down 11.5% on the day. U.S. crude fell a similar amount to $83.33 a barrel. . While still above pre-war levels that were around $70, that is down significantly from late March's highs, which, for Brent, were close to $120 a barrel.
Stocks around the world, which had already been trading around record highs, jumped further on the news.
The S&P 500, which reached fresh records this week,
rose 1.15%, to 7,115.31. The Dow Jones Industrial Average
rose 1.95%, to 49,524.91. The Nasdaq rose 1.15%, to
24,378.97, and the Russell 2000 small cap index also rose to a
record. Europe's STOXX 600 rose 1.49% having been close to
flat before the news.
"This is clearly positive news and should bring some relief for
oil prices and eventually also for consumers," said Carsten
Brzeski, global head of macro at ING.
"However, the question is whether, even if Iran claims to open
the Strait, whether vessels will really dare passing? Insurers
and shipowners might still be hesitant to send through vessels,
which means that even if in theory open, traffic through the
Strait will only very gradually pick up."
Energy stocks that benefit from high oil prices fell. Oil and
gas names in Europe slid 4.5%, followed by U.S. majors
Exxon Mobil
'CHUNKY TAIL RISK'
Government bonds rallied, with the benchmark U.S. 10-year Treasury yield touching its lowest since mid-March and last seen down 7.5 basis points to 4.234%. The 2-year note, which typically tracks expectations of rate moves from the Federal Reserve, fell 7.6 basis points to 3.702%.
Treasuries had held up better than European bonds since the war began because the United States, as a net energy exporter, is relatively insulated against surging energy prices.
Traders pared back bets that those price rises would prompt the European Central Bank and Bank of England to raise rates on Friday, helping German 10-year Bunds fall 7.5 basis points to 2.958%. Germany's rate-sensitive 2-year yield fell 10.7 basis points to 2.417%.
"If we move to a situation where the path is still towards de-escalation - but we now have the bonus of commodity flows through Hormuz getting back to something resembling a normal level that we saw pre-conflict - then that's obviously removing a pretty chunky tail-risk for the economy," said Michael Brown, senior research strategist at Pepperstone.
"I think that's why markets are reacting so positively."
The dollar also slid and was on track for a second straight weekly decline as investors unwound positions in the safe-haven currency. The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.51% to 97.71. (Reporting by Isla Binnie in New York and Alun John in London, additional reporting by Sophie Kiderlin, Niket Nishant and Lucy Raitano; Editing by Kirsten Donovan, Elaine Hardcastle)
