Trump’s Hormuz deadline delay fails to soothe markets amid signs of US and Iranian escalation
There’s little sign of relief in the markets from President Trump’s announcement yesterday of a 10-day delay of the deadline he imposed on Iran to reopen the Strait of Hormuz.
Crude oil prices are climbing and stocks are once again slumping, with the S&P 500, Nasdaq Composite, and Russell 2000 small-cap index all in the red early Friday.
Consumer discretionary stocks sank. Cruise lines Norwegian, Royal Caribbean, and Carnival — which cut its profit outlook on climbing fuel costs as part of earnings Friday — are falling. Other bellwethers of discretionary consumer spending that are less oil-exposed, like Airbnb, DoorDash, and Starbucks, are sinking.
On the other hand, consumer staples stocks — which typically hold up better during tough economic times — rallied.
Soup giant Campbell’s, cigarette seller Altria, ketchup behemoth Kraft Heinz, and spice maker McCormick are climbing.
Energy shares bounced along with rising crude oil prices, with gas driller APA Corporation, oil field services company Halliburton, and integrated giant Exxon gaining.
The energy trade, of course, keyed off the climb in crude oil prices, with benchmark US West Texas Intermediate rising to roughly $98 a barrel, despite Trump’s assurances as part of his deadline delay on Thursday that talks to end the war “are going very well.”
Those comments were largely brushed aside by the markets, a starkly different reaction from the president’s previous delay of the same deadline on Monday. That announcement generated a massive relief rally in crude oil prices and stocks on the hopes that substantive negotiations would begin shortly, or already had.
But Iran’s rejection of an initial US peace plan on Thursday, along with reports that the administration is considering sending another 10,000 US troops to the region and that Chinese ships trying to transit the Hormuz choke point had turned back, seemed to undercut that message.
“Any further statements by Trump about a deal are white noise to the markets,” market analyst Jim Bianco wrote in a post on LinkedIn on Friday. “Only if the IRANIANS say the talks are going well will it impact markets.”
Consumer discretionary stocks sank. Cruise lines Norwegian, Royal Caribbean, and Carnival — which cut its profit outlook on climbing fuel costs as part of earnings Friday — are falling. Other bellwethers of discretionary consumer spending that are less oil-exposed, like Airbnb, DoorDash, and Starbucks, are sinking.
On the other hand, consumer staples stocks — which typically hold up better during tough economic times — rallied.
Soup giant Campbell’s, cigarette seller Altria, ketchup behemoth Kraft Heinz, and spice maker McCormick are climbing.
Energy shares bounced along with rising crude oil prices, with gas driller APA Corporation, oil field services company Halliburton, and integrated giant Exxon gaining.
The energy trade, of course, keyed off the climb in crude oil prices, with benchmark US West Texas Intermediate rising to roughly $98 a barrel, despite Trump’s assurances as part of his deadline delay on Thursday that talks to end the war “are going very well.”
Those comments were largely brushed aside by the markets, a starkly different reaction from the president’s previous delay of the same deadline on Monday. That announcement generated a massive relief rally in crude oil prices and stocks on the hopes that substantive negotiations would begin shortly, or already had.
But Iran’s rejection of an initial US peace plan on Thursday, along with reports that the administration is considering sending another 10,000 US troops to the region and that Chinese ships trying to transit the Hormuz choke point had turned back, seemed to undercut that message.
“Any further statements by Trump about a deal are white noise to the markets,” market analyst Jim Bianco wrote in a post on LinkedIn on Friday. “Only if the IRANIANS say the talks are going well will it impact markets.”
