By Karen Brettell and Dhara Ranasinghe
NEW YORK, March 23 (Reuters) – Global stocks rebounded from a four-month low on Monday after U.S. President Donald Trump announced he would order the military to postpone any strikes against Iranian power plants and energy infrastructure, easing fears over the repercussions of a deeper oil shock.
Trump also said the U.S. was in talks with Tehran about ending the U.S.-Israeli war on Iran, however parliamentary Speaker Mohammad Baqer Qalibaf, mooted to be the leader representing Iran in contacts with the U.S., posted on social media that no talks had been held with the U.S.
Oil prices tumbled by more than 8%, the dollar fell against other major currencies and government borrowing costs eased.
“It (the comments) buys time. We are in a very intense conflict… maybe they need some more time to prepare whatever they’re staging to do. I don’t see this conflict going back in the bottle overnight,” said David Bianco, Americas chief investment officer at DWS.
IRANIAN MEDIA CONTRADICT TRUMP’S COMMENTS
U.S. crude was last down 8.78% to $89.61 a barrel and Brent fell to $101.42 per barrel, down 9.64% on the day.
The Dow Jones Industrial Average rose 655.41 points, or 1.44%, to 46,232.88, the S&P 500 rose 77.50 points, or 1.19%, to 6,583.98 and the Nasdaq Composite rose 273.61 points, or 1.26%, to 21,921.22.
MSCI’s gauge of stocks across the globe rose 4.77 points, or 0.49%, to 986.08. The pan-European STOXX 600 index rose 0.61%.
INVESTORS TRIM RATE HIKE EXPECTATIONS
Britain’s 2-year bond yield, which has borne the brunt of a bond selloff since the start of the conflict, was last down 17 basis points on the day at 4.409%. The 10-year yield dropped from its highest since 2008.
Investors trimmed their bets on Bank of England rate hikes, now pricing in two hikes by year-end versus more than three earlier on Monday, while they also cut expectations for the European Central Bank.
In the U.S., two-year and 10-year Treasury yields were 2 to 3 basis points lower, with the 10-year yield last at 4.36%.
The dollar was broadly soft, having traded higher against most other currencies until the headline hit. The euro was last up 0.23% at $1.1597.
“(The market) is not saying that the worst is over, but that the odds that the worst will manifest itself in the next couple of days have gone down,” said Steven Englander, head of global G10 FX research and North America macro strategy at Standard Chartered in New York.
(Additional reporting by Laura Matthews, Dhara Ranasinghe, Yoruk Bahceli, Lucy Raitano and Purvi Agarwal; Editing by Amanda Cooper, Elisa Martinuzzi and Alex Richardson)
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