Global markets displayed a mixed reaction after President Trump rejected Iran's seven-day proposal to reopen the Strait of Hormuz. While Friday saw gains in US stock indexes like the S&P 500 (+0.51%), Dow Jones Industrial Average (+0.93%), and Nasdaq 100 (+0.42%) due to optimism about a potential US-Iran deal and a drop in WTI crude oil by over 2%, the sentiment shifted after Trump's rejection.
Iran's proposal, delivered via Qatari mediators, included reopening the vital shipping lane and ending hostilities in exchange for the US lifting its naval blockade, releasing approximately $12 billion of frozen assets, and lifting oil sanctions. However, Trump deemed the offer "not acceptable," stating that Iran is "losing so badly" and that the US already has "total control" of the strait. This rejection led to renewed concerns about energy supply disruptions.
The bond market also experienced turbulence, with the 10-year T-note yield reaching a new 19-year high of 5.23% on Friday, driven by fears of continued Federal Reserve interest rate hikes. Although T-notes recovered from early losses as crude oil prices fell, the broader uncertainty surrounding the Strait of Hormuz and US-Iran relations is expected to keep energy prices elevated. Persian Gulf stock markets showed mixed results, with Saudi Arabia's benchmark index gaining 0.8% while Qatar fell 0.3%.
Chipmakers and AI stocks, such as Microchip Technology and ON Semiconductor (both up over 5%), had supported the Nasdaq 100 on Friday, reflecting positive sentiment for AI infrastructure demand. However, the overall market direction in the immediate aftermath of Trump's rejection suggests caution. Iranian Foreign Minister Abbas Araghchi indicated that Iran is awaiting official US response, with Oman continuing to mediate.
