WORLD MARKETS

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Negotiations between the United States and Iran are ongoing; Trump believes the ceasefire is “on life support.”

Oil prices end higher, stocks make moderate gains.

Iran on the agenda as Trump heads to China this week (Updates on market closing after U.S. trading) by Sinéad Carew and Amanda Cooper

U.S. stock indexes edged higher to close at record levels, while the dollar slightly strengthened on Monday as investors awaited a meeting between U.S. President Donald Trump and Chinese President Xi Jinping.

Oil prices rebounded after Trump stated the American ceasefire with Iran was “on life support,” following his criticism of Tehran’s response to an American peace proposal as “stupid.” His remarks raised concerns that the 10-week-old conflict could linger, paralyzing maritime traffic in the Strait of Hormuz.

Iran’s response focused on ending the war on all fronts and Tehran demanded compensation for war damages, reaffirming its sovereignty over the Strait of Hormuz and calling on the U.S. to end its naval blockade, ensure no more attacks, lift sanctions, and remove the ban on Iranian oil sales.

However, as the Middle East is expected to take center stage on the agenda this week during the first face-to-face talks between Trump and Xi, the first in over six months, Scott Wren, senior global market strategist at Wells Fargo Investment Institute, stated that investors were cautiously optimistic about progress towards peace.

“It all revolves around the strait and the date of its reopening,” said Mr. Wren. “There is some optimism about the influence China could exert to resolve the strait issue.”

On Wall Street, the S&P 500 gained 13.91 points, or 0.19%, to 7,412.84, and the Nasdaq Composite rose by 27.05 points, or 0.10%, to 26,274.13, both closing at record levels. The Dow Jones Industrial Average gained 95.31 points, or 0.19%, to 49,704.47, but remained below its February 10 closing record.

The MSCI index, which measures global stocks, gained 2.38 points, or 0.22%, to 1,108.01. Additionally, the pan-European STOXX 600 index closed up by 0.11%.

In currency markets, the dollar retreated from its session highs after Trump’s rejection of Iran’s response maintained fears of prolonged war.

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, fell by 0.05% to 97.96, while the euro weakened by 0.06% to $1.1777.

Against the Japanese yen, the dollar strengthened by 0.37% to 157.23.

The British pound weakened by 0.16% to $1.361 as Prime Minister Keir Starmer attempted to calm a rebellion within his ruling Labour party following last week’s local elections debacle.

In energy markets, oil prices closed up by nearly 3% after Trump’s comments heightened concerns about supply, with the Strait of Hormuz remaining largely closed and no clear end to the war in sight.

U.S. crude closed up by 2.78% at $98.07 a barrel, while Brent rose to $104.21 a barrel, up by 2.88%.

U.S. Treasury bond yields rose, with the increase in oil prices fueling inflation fears.

The 10-year U.S. Treasury bond yield rose by 4.6 basis points to 4.41%, from 4.364% on Friday night. The 30-year bond yield rose by 3.6 basis points to 4.9835%.

The 2-year bond yield, which typically moves in line with Federal Reserve rate expectations, rose by 5.9 basis points to 3.952%.

Gold prices reversed to gain ground in a highly volatile context on Monday, as investors assessed the diplomatic relations between the U.S. and Iran and awaited U.S. inflation data later in the week.

Spot gold gained 0.44% to $4735.39 an ounce. U.S. gold futures rose by 0.15% to $4727.70 an ounce.