Stocks Fall as Middle East Tensions Rise

Friday’s positive momentum, built on expectations that the Strait of Hormuz would reopen, was dashed over the weekend. Not only did the Strait remain closed, reports indicate that both Iran and the US attacked commercial ships in an effort to enforce competing blockades. Peace talks are expected to resume, but heading into tomorrow’s ceasefire deadline, the political situation remains volatile.

This morning finds US index futures down 0.4% across the board. In Europe, the DAX is down 1.3% while the FTSE is down 0.7%. Energy and metals are moving in opposite directions. Crude oil is up 5.0%–5.5%, and gasoline is up 2.9%. Gold, however, is down 1.0%, with silver down 2.5% and copper down 1.3%.

Canada consumer prices (2.4% vs Street 2.5% and previous 1.8%) indicate that inflation pressures have increased since the start of the war, but not as much as feared. Economic reports this week include US retail sales on Tuesday, flash PMI reports from around the world on Thursday, along with retail sales data for Canada and the UK on Friday.

We move into the heart of earnings season this week, with results expanding from banks into leaders across a wider range of industries, including technology, consumer products, and industrials. Headliners include UnitedHealth and United Airlines on Tuesday; Boeing, Rogers, AT&T, Tesla, Lam Research* and Texas Instruments on Wednesday; Freeport, Teck Resources and Intel on Thursday; finishing with Western Union and Norfolk Southern on Friday.

*Shares of Lam Research are held in some portfolios managed by SIA Wealth Management.

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