Stock Selloff Eases as Futures Rise, Oil Slips: Markets Wrap

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(Bloomberg) — The biggest monthly selloff in global stocks since 2022 moderated after the US gave Iran more time to reach a deal on ending the month-long war. Oil edged lower.

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Asian shares pared initial declines to be down 0.4% and equity-index futures for the US and Europe both rose after US President Donald Trump delayed his deadline for Iran to agree to a ceasefire deal by 10 days. His comments came after Wall Street gauges sank to their lowest level since September amid skepticism about the US-Iran talks.

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The MSCI All Country World Index still headed for its worst month in more than three years as the Middle East conflict stokes concerns about quicker inflation and lower economic growth. Some of those worries eased as Brent slipped 0.7% to about $107 a barrel on Friday, putting the commodity on course for its first weekly decline since mid February.

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Sentiment remained fragile. Some of the early optimism was damped after the Wall Street Journal reported the Pentagon is looking at sending up to 10,000 additional ground troops to the Middle East.

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The latest bout of whipsaw trading extends a month of war-driven swings, with investors uncertain about whether hostilities are set to ease or escalate. Traders are closely watching the Strait of Hormuz, a key waterway for Middle East oil flows that remains effectively shut, driving crude oil higher and adding to inflation pressures.

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“By extending the deadline, it effectively kicks the can down the road, pushing back any concrete resolution regarding the reopening of the Strait of Hormuz,” Tony Sycamore, a market analyst at IG Australia, wrote in a note. “This, in turn, simply extends the uncertainty weighing on markets and the broader global economy.”

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Trump said talks with Iran were going “very well.” He also said he would extend his pledge to refrain from attacks on the country’s energy sites, offering a brief calm to global energy markets jolted by the conflict.

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Iran responded to the ceasefire proposal through intermediaries, the semi-official Tasnim news agency reported, and is now awaiting a reply. Tehran has a string of conditions for ending the conflict, one of which is a guarantee that the US and Israel won’t resume their attacks.

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The markets were caught off guard by the initial US and Israeli strikes at the end of February, which came in the middle of talks that were ostensibly going well, but were accompanied by a huge US military buildup in the Middle East, Kyle Rodda at Capital.com wrote in a note.

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“The current situation looks very similar, with markets positioning for a potential weekend escalation,” he said.

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What Bloomberg’s Strategists Say…

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“Regional bonds are under intensifying pressure amid concerns over the potential for escalation in the Iran war. With bonds, currencies, and equities now selling off in tandem across the region, investors are left with few places to hide as the de-risking move accelerates into the weekend.”