Mideast Peace Efforts in Focus as Trading Resumes: Markets Wrap

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(Bloomberg) — The month-long surge in risky assets faces another test as investors gauge the viability of the latest Mideast truce proposals and await a key US employment report to assess the war’s economic impact.

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US President Donald Trump said Saturday he’d been briefed on the “concept of the deal” from Iran to end the conflict, which is now in its third month, but later cast doubt on whether it would be acceptable. He said he wouldn’t rule out restarting strikes on Iranian targets if its rulers “misbehave.”

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Iran’s proposal called for a complete end to the conflict within 30 days along with guarantees against renewed strikes, the semi-official Tasnim News Agency reported. The plan reiterates Tehran’s earlier demands, including that US forces withdraw from near Iran, a maritime blockade be lifted, sanctions removed and reparations paid, it said. On Sunday, Iran said it received the US response to its plan via Pakistan, and is reviewing it.

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Crude prices eased Friday and Treasuries briefly erased declines on reports a proposal was made to the US through Pakistan. West Texas Intermediate oil settled near $102 a barrel, while Brent was around $108, after setting a four-year high last week. Trading in US stock, bond and oil futures resumes in earnest at 6 p.m. New York time Sunday. The US dollar was quoted mixed against its major peers as markets reopened in Asia.

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“The market is being very patient with this level of uncertainty because it is focused on the other side of the conflict, which may be too optimistic,” said Joe Gilbert, a portfolio manager at Integrity Asset Management. “The economic damage being done will be more materially felt in the next month.”

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Traders have mostly set aside concern about the economic fallout from the hostilities, with signs of corporate resilience driving stocks to their best month since 2020. About 81% of the S&P 500’s companies have beaten first-quarter earnings estimates, according to data compiled by Bloomberg.

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Forecasters expect the April jobs report on Friday to show a solid 62,000 increase in payrolls, accelerating wage growth, a stable unemployment rate and an uptick in labor-force participation. Private-sector job growth was probably even stronger, based on a Bloomberg survey of economists.

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The S&P 500 Index and Nasdaq 100 ended April at highs. Risk-taking went beyond equities, with high-yield credit spreads near multi-year tights and retail traders piling into prediction markets and zero-day options. The rally has held through the war in Iran, oil above $100 a barrel and a Federal Reserve that has signaled rates will stay higher for longer amid elevated energy costs.

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‘Tail Risk’

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“You could certainly point to the corporate profits and amazing earnings season we have here,” said Eric Sterner, chief investment officer at Apollon Wealth. “But I don’t think the market is properly discounting the tail risk that this conflict can last longer.”