U.S. stocks and bonds sold off and oil continued its weekslong upward trajectory Thursday morning as optimism faded about possible peace talks or a U.S.-Iran ceasefire.
Thursday also marks 48 hours until the expiration of President Donald Trump’s five-day pause on strikes against Iran’s power infrastructure.
In a social media post, Trump appeared to indicate that talks with Tehran were not progressing. “The Iranian negotiators are very different and ‘strange,’” Trump wrote on Truth Social. “They better get serious soon, before it is too late, because once that happens, there is no turning back, and it won’t be pretty!”
The price of U.S. crude oil approached $95 per barrel, up more than 4.2%. International Brent crude rose 4.5%, to more than $107 per barrel. Since the war started, the cost of U.S. crude oil is up more than 40%. Since the start of the year it has risen more than 60%.
Heating oil, a proxy for jet fuel prices, also spiked 6% early Thursday.
On Thursday, Trump downplayed the severity of the oil and gas price spikes.
Energy prices "have not gone up as much as I thought," Trump said at a Cabinet meeting in Washington.
"It's not over, so maybe it'll go up a little bit more," Trump added. "It's all going to come back down to where it was and probably lower."
Analysts widely believe that oil prices will continue to remain elevated over the long run, given the risk that shippers will now have to assume for oil tankers that transit through Strait of Hormuz.
Shortly after Trump's comments around 11 a.m. ET, the S&P 500 had fallen 0.6%, the Nasdaq Composite was trading down by 1% and the Dow was 100 points lower. The Russell 2000 dropped 0.8%.
The “de-escalation playbook” was put on hold today, “with posturing headlines creating a lot of noise and little clarity on actual ceasefire progress,” JPMorgan’s trading desk wrote in a note to clients.
“Markets have generally sided with the U.S.’ intent to off-ramp,” they wrote, but stocks pulled back because “oil prices failed to hold below $100, also pressuring gold and rates,” they wrote.
Bonds also sold off, driving yields higher. The 10-year U.S. Treasury bond yield rose to nearly 4.4%. The yield on 20- and 30-year bonds approached 5%.
Treasury yields, especially for the 10-year bond, heavily influence consumer lending rates. As a result, mortgage rates have risen from around 6% at the start of the war on Feb. 28 to more than 6.4% as of early Thursday.
Stock indexes in Asia had begun to sell off overnight. China’s Shanghai index and Hong Kong’s Hang Seng index both fell 1%, while Korea’s Kospi slid 3.2%.
These indexes were also weighed down by big drops in shares of tech companies, including Samsung, after Google revealed a new, more efficient use of storage and memory systems for artificial intelligence.
The Stoxx 600 in Europe followed, and as of 11 a.m. ET it was trading lower by 0..8%. Flagship stock indexes in Germany, France and the U.K. tumbled 1%.
