By Jamie McGeever
ORLANDO, Florida, April 22 (Reuters) – U.S. stocks surged on Wednesday, with the Nasdaq setting a new high and the S&P 500 a new closing high, as tech and earnings optimism outweighed Brent crude’s return above $100 a barrel and concerns that peace in the Middle East is proving elusive.
In my column today, I look at why the timely relief for U.S. consumers from bumper tax refunds will be short-lived – the boost will be more than offset by the “higher for longer” gasoline prices sparked by the Iran war.
Before you read on, don’t forget to sign up for my upcoming LSEG webinar on April 23, where I will talk about safe havens in uncertain times with my ROI colleague Mike Dolan.
If you have more time to read, here are a few articles I recommend to help you make sense of what happened in markets today.
1. Iran seizes ships in Strait of Hormuz after Trump halts attacks
2. From paint to planes, Iran war lifts costs, darkens outlooks
3. Iran war may crush oil demand today, but send it soaring long term: Bousso
4. Warsh’s impossible mission – Tame inflation and please Trump: Mike Dolan
5. Germany halves 2026 growth forecast, raises inflation outlook amid Iran war
Today’s Key Market Moves
• STOCKS: Asia mixed, but record highs for Nikkei, KOSPI. Europe, UK benchmarks dip. Wall Street roars higher – new high for Nasdaq, new closing high for S&P 500.
• SECTORS/SHARES: Seven of the 11 sectors in the S&P 500 rise, four fall. Tech +2.3%. GE Vernova +14%, Micron Technology +9%, Boeing +5%. Tesla +4% after Q1 results. United Airlines -5.5%.
• FX: Dollar up broadly, +0.5% vs Swissie. USD/JPY nears 160.00. Bitcoin +4% to 3-month high, $80,000 in sight.
• BONDS: U.S. curve flattens for a third day. Decent 20-year U.S. auction – above average bid/cover, low primary dealer take-up.
• COMMODITIES/METALS: Oil +3%, Brent back above $100/bbl.
Today’s Talking Points
* Oil back above $100
Brent crude futures are above $100 a barrel, lifted in large part by unease at the hiatus in direct U.S.-Iran talks. After three weeks of retreat, Brent is up 12% so far this week and on track for its second-biggest weekly rise of the war.
The lack of peace talks is worrying. With the conflict about to enter its third month, Rabobank analysts expect the Strait of Hormuz to remain closed for up to another four weeks, perhaps into late May. But the likelihood of escalation to achieve that de-escalation is very high, “which risks more energy supply damage.” This doesn’t seem an unreasonable take.
* Profit warming
Despite the myriad risks – war, energy shock, inflation, tariffs, Fed independence, breakdown of the global order – stock markets are buoyant. Why? Money talks, specifically earnings – as long as the returns are palatable, investors can stomach nearly anything.
Investors are licking their lips. JPMorgan analysts have raised their S&P 500 EPS forecast for this year to $330, on tech/AI optimism rather than an improving geopolitical outlook. BlackRock is now overweight U.S. stocks for similar reasons. Who’s next to revise up their outlook?
* FX swap shop
The Middle East conflict and disruption to energy supplies are taking a financial toll on a range of countries, and U.S. Treasury Secretary Scott Bessent said on Wednesday a number of U.S. allies in the Gulf region and Asia have requested currency swap lines from the United States.
Bessent didn’t name them, although President Donald Trump said on Tuesday he is considering a dollar swap line with the United Arab Emirates. Swap lines give countries access to hard currency and ease strains on funding and local markets. But didn’t Trump also say last year Gulf countries are going to invest trillions of dollars in the U.S.?
What could move markets tomorrow?
• Developments in the Middle East
• Energy market moves
• PMIs for Japan, euro zone, UK, U.S. (April, flash)
• South Korea GDP (Q1, advance)
• UK public finances (March)
• European Central Bank publishes account of March policy meeting
• Canada PPI inflation (March)
• U.S. Treasury auctions $26 billion of 5-year TIPS
• U.S. weekly jobless claims
• U.S. earnings include Intel, American Express, Blackstone
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Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
(Reporting by Jamie McGeever; Editing by Nia Williams)
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