By Jamie McGeever
ORLANDO, Florida, March 23 (Reuters) - Oil sank and U.S. stocks rose on Monday on hopes that an end to the Middle East war could be in sight after U.S. President Donald Trump delayed military strikes on Iran's power plants and indicated that early talks with Tehran have been held.
In my column today I look at why, for now at least, U.S. consumers can cope with $100-a-barrel oil - household balance sheets are in rude health and, perhaps surprisingly, gasoline and energy products account
for a mere 2% of total consumption.
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 denies talks with U.S. after Trump postponesstrikes on power grid 2. Trump's Iran war oil shield is cracking: Bousso 3. Trump approved Iran operation after Netanyahu argued forjoint killing of Khamenei, sources say 4. Fed's Miran still believes Fed should cut interest rates- Bloomberg TV 5. BOJ's narrative shift signals dogged commitment to ratehikesToday's Key Market Moves
* STOCKS: Asia tumbles: Japan, China down >3%, South Koreadown >6%. But Europe rebounds ~1%; U.S. indexes have best daysince early February, up 1-2.5%. Brazil +3.5%, biggest rise inthree years. * SECTORS/SHARES: All 11 sectors on the S&P 500 rise.Consumer discretionaries +2.5%, tech +1.5%, even energy +1%.Airlines, cruise ship operators outperform, Palantir +7%. EsteeLauder -7% * FX: Dollar index -0.7%, greenback slumps more than 1% vsseveral emerging currencies like BRL, CLP, HUF. Biggest G10mover is NOK, down ~2% as oil sinks. * BONDS: U.S. yields fall 7 bps at short end, bullsteepening the curve. Today's rollercoaster epitomized by UKgilts - 10-year yield hits highest since 2008 above 5%, then the2-year yield has biggest decline in a year. * COMMODITIES/METALS: Oil plunges 10%. Gold hits 4-monthlow, ends down 2%; silver +2%.Today's Talking Points
* TACO bell rings
Whether the U.S. postponing strikes on Iran's energy complex marks the beginning of the end of the war or has a lasting market impact remains to be seen. But Monday's sudden rebound in risk appetite shows how much investors are hoping it proves to be the latest "Trump Always Chickens Out" signal to buy.
The natural bias toward "TACO" trades is understandable, although in this case, caution is still required. The damage done to oil and LNG supply, facilities, and refining capacity will take months to fully heal, and the world will be living with high energy costs for even longer.
* Safe-haven, where art thou?
Gold's plunge since the Middle East conflict erupted nearly a month ago has been remarkable, and raises an uncomfortable question for investors: is there such a thing as a safe-haven asset any more?
If gold can't shine amid war, a global oil shock, falling stock markets and rising inflation, where can investors turn? Perhaps gold has become just another speculative asset, and the "one size fits all" concept of a safe haven is gone. In times of crisis, investors now have to be more nimble, flexible, and think outside the box.
* Sound and revision
As the global energy shock rolls into its fourth week, revised growth and inflation forecasts are starting to trickle in. The trajectories are no surprise, but the numbers do highlight the tough position central bankers find themselves in.
"3% inflation is here to stay", say BNP Paribas economists, raising their 2026 U.S. core and headline forecasts to 3.2% and 3.3%, respectively. Goldman's economists reckon high oil and gas prices will add 1 percentage point to global headline inflation over the next year, and subtract 0.4pp from global GDP growth.
What could move markets tomorrow?
* Developments in the Middle East * Energy market moves * Global PMIs, including from Japan, UK, euro zone, U.S.(March, flash) * Japan inflation (February) * South Korea producer price inflation (February) * Taiwan industrial production (February) * ECB policymakers Pedro Machado, Olaf Sleijpen, PieroCipollone and Philip Lane speak at separate events * U.S. productivity (Q4, revised) * U.S. Treasury sells $69 billion of two-year notes atauction * U.S. Federal Reserve Governor Michael Barr speaksWant to receive Trading Day in your inbox every weekday morning? Sign up for my newsletter here.
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)
