A Reuters Open Interest newsletter |
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What matters in U.S. and global markets today |
By Mike Dolan, Editor-at-Large for Finance and Markets |
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The turbulent first quarter of 2026 ends with a dull thud, as the Iran war continues to rumble and the energy price shock hits homes with average U.S. gas pump prices crossing $4 per gallon for the first time in more than three years. The war's expected timeline shifts from headline to headline. For those betting the conflict will end soon, the Wall Street Journal provided some ammunition, reporting on Monday that President Trump was prepared to end the war without opening the Strait of Hormuz - an encouraging thought that's lifted U.S. stock futures on the last day of a bruising March. I'll get into that and more below. But first, check out my latest column on how markets are giving central banks room to pause amid the energy shock. And listen to today's Morning Bid podcast, where I take stock of the first quarter's major market moves. Subscribe to hear Reuters journalists discuss the biggest news in markets and finance seven days a week. (Correction: The March 30 edition of Morning Bid contained textual errors in the final bullet of the Market Minute, which should have read: "Things are already bad for global oil and LNG markets, but what would the worst-case scenario actually look like? ".) |
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- Iran attacked and set ablaze a fully loaded crude oil tanker off Dubai on Monday, as President Donald Trump warned the U.S. would "obliterate" Iran's energy plants and oil wells if it .
- However, Trump also told aides he is willing to end the Iran military campaign even if the strait remains largely closed, according to the Wall Street Journal. That news and lifted stock markets off their lows.
- The U.S. national average retail price of gasoline crossed $4 a gallon for the first time in .
- Rising borrowing costs due to the Iran war couldn't come at a worse time for U.S. tech firms as they increasingly fund mounting AI capex through debt, .
- Record UK wind output has helped shield its power system from the worst effects of the Middle East war, .
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March is the cruellest month |
While the WSJ report indicates that Trump is looking for an immediate offramp, those pessimistic about the duration of the war may focus more on the Iranian attack on an oil tanker in the Gulf that took place early Tuesday - as well as further reports of U.S. troops arriving in the region, this time 2,500 Marines. Crude prices were choppy on Tuesday morning, ebbing slightly before climbing again to leave Brent hovering around $115 per barrel and U.S. crude around $104. Stocks were mixed, meantime, with Wall Street futures in the green before the bell. And while European shares edged up on de-escalation hopes, the pan-European STOXX 600 still remains on track for its sharpest monthly fall since 2020. Elsewhere, Asian trading had another painful session as major indexes closed lower - with South Korea's KOSPI suffering its steepest monthly fall since 2008. U.S. Treasury yields eased on Monday, though they remain on track for a steep monthly rise, with eurozone bond yields dipping as well. Fed Chair Jerome Powell helped the recovery in Treasuries yesterday when he noted that long-term inflation expectations remained "well anchored" - though he otherwise said the Fed would "wait and see" how the war ultimately impacts inflation. But as the IMF pointed out on Monday, "all roads lead to higher inflation and slower growth". In that vein, eurozone inflation leapt to 2.5% in March from 1.9% previously, while on Monday fresh German inflation data showed a jump to 2.8% from 2.0%. Elsewhere, China business surveys showed some resilience this month, with factory activity growing at the fastest pace in a year, mirroring readings elsewhere. Stateside, a big labor market week - culminating in the March jobs report on Good Friday - will kick off today with the release of February's job openings data. And traders will also get a read on how U.S. consumers are weathering the energy shock so far with the release of the Conference Board's latest consumer confidence index. With that, onto today's column. |
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Market tightening gives central banks time to wait and watch |
Everyone has an opinion on what central banks should do with rates as the Iran war drives an energy shock. The answer, for now, may be nothing. Most monetary authorities have so far only talked tough, warning of "decisive" action if needed. But a sharp tightening of overall financial conditions has already hit anyway, thanks to higher energy prices, rising borrowing rates, mortgage rates, wider credit premiums and falling stock prices. The Chicago Federal Reserve's index of U.S. national financial conditions tightened in March by its most in any single month since U.S. President Donald Trump's sweeping tariff announcement last April - sending the gauge to its most restrictive since last May. |
Graphics are produced by Reuters. |
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Graphics are produced by Reuters. |
Much like March manufacturing readings from Europe and America, China's factory activity grew at the fastest pace in a year this month, an official survey showed on Tuesday. Whether this was a spurt in activity before the full impact of March's oil price shock or simply despite it given China's large energy stockpiles. The reboot after Lunar New Year holidays in February may have been a factor. |
- U.S. March consumer confidence (10:00 AM EDT), JOLTS job openings (10:00 AM EDT)
- Fed's Michael Barr and Michelle Bowman, Chicago Fed's Austan Goolsbee and Kansas Fed's Jeffrey Schmid all speak
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