Stocks Mixed After Iran Announcement; Dollar Gains: Markets Wrap

(Bloomberg) -- U.S. stocks were mixed after President Donald Trump’s decision to scrap a nuclear deal with Iran sparked concern it could increase geopolitical tensions. The dollar rose and Treasury yields pushed higher.

The S&P 500 Index was little changed as banks advanced and utility stocks slumped. West Texas crude sank as much as 4.4 percent before paring the loss in a volatile trading session as investors digested what the Iran move could mean for energy supplies. The greenback strengthened for a third day. Ten-year Treasury yields rose toward 3 percent after JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon warned a climb to 4 percent may be coming.

Concern about an increase in geopolitical tension is weighing on global sentiment at the same time worries about pricey stocks and rising borrowing costs are bubbling up amid higher Treasury yields and a stronger dollar. Sanctions on Iran could potentially disrupt supplies from OPEC’s third-largest producer and open an uncertain new chapter for the Middle East.

“I don’t think there’s anything that’s a major surprise -- the announcement was well advertised,” said Ernie Cecilia, the chief investment officer at Bryn Mawr Trust Co. “What seems to be a little surprise is that it didn’t allow for a whole lot of other possibilities, if you want to call it that. He was a little more specific, he was pretty straight forward.”

Elsewhere, Argentina’s peso pared losses after the government was said to be in talks with the International Monetary Fund for a $30 billion flexible credit line to help defend the currency after it dropped to a record. Italian shares tumbled on the prospect for fresh elections that may boost the chances of a populist government taking power. Indonesia’s rupiah sank to its weakest since 2015, and the nation’s government bonds slumped. Turkey’s lira hit another low and the country’s benchmark equity index fell.

Terminal users can read more in our markets live blog.

Some key events coming up this week:

• Malaysia holds a general election Wednesday.
• Japanese Prime Minister Shinzo Abe hosts South Korean President Moon Jae-in and Chinese Premier Li Keqiang on Wednesday.
• There’s a Bank of England policy decision on Thursday.
• U.S. inflation data for April is due the same day.
• Some of the company earnings due include Walt Disney, Petrobras, Marriott, Toyota, Ambev and Deutsche Telekom.

And these are the main moves in markets:

Stocks

• The S&P 500 Index ended the trading day little changed.
• The Stoxx Europe 600 Index rose 0.1 percent.
• The MSCI Asia Pacific Index added 0.4 percent to the highest in a week.
• Japan’s Nikkei 225 Stock Average rose 0.2 percent.
• The MSCI Emerging Market Index rose 0.3 percent.

Currencies

• The Bloomberg Dollar Spot Index climbed 0.3 percent to the highest this year.
• The euro declined 0.5 percent to $1.186, the weakest since December.
• The British pound fell 0.1 percent to $1.3544, the weakest in more than four months.
• The Japanese yen was little changed at 109.11 per dollar.

Bonds

• The yield on 10-year Treasuries rose two basis points to 2.97 percent.
• Germany’s 10-year yield climbed three basis points to 0.56 percent.
• Britain’s 10-year yield increased four basis points to 1.44 percent.

Commodities

• West Texas Intermediate crude decreased 1.4 percent to $69.74 a barrel, the first retreat in a week.
• Gold was little changed at $1,314.59 an ounce.

--With assistance from Andreea Papuc Janine Wolf Stephen Engle Eric Lam Christopher Anstey Yakob Peterseil Samuel Potter Sophie Caronello and Jessica Summers

To contact the reporter on this story: Sarah Ponczek in New York at sponczek2@bloomberg.net.

To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Brendan Walsh

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