Berliner Boersenzeitung - Oil eases, equities rise as market focuses on Strait of Hormuz

As the Middle East war entered its third week, Wall Street opened higher while most European stocks climbed after Asian stocks mainly dipped.

International benchmark Brent North Sea crude dropped back two percent to $101 after rising about three percent earlier in the day while the main US contract West Texas Intermediate plunged more than five percent to $93.37.

The price falls came as the head of the International Energy Agency, Fatih Birol, said member countries could unlock more oil from strategic stocks "if needed". The IEA on March 11 already agreed its biggest-ever release, of 400 million barrels.

Crude prices also eased after a Pakistani oil tanker became the first non-Iranian tanker to transit the Strait of Hormuz with its automatic transponder system activated, according to monitor Marine Traffic.

"When you get a bit of a reprieve in the energy price, it's not surprising to see a bounce in equity markets," Art Hogan, from B. Riley Wealth Management, told AFP.

But he added that the US trading day had just started and that other news could emerge

US President Donald Trump piled pressure on allied powers over the weekend to help reopen the vital shipping lane choked off by Iranian attacks.

UK Prime Minister Keir Starmer said London was working with allies to come up with a "viable" plan to reopen the Strait of Hormuz, which Iran has declared closed to US and US-allied traffic.

Germany meanwhile said the war in the Middle East, started by US-Israeli strikes on Iran, has "nothing to do with NATO".

"The situation is not close to being resolved but investors seem reassured by signs of action," said AJ Bell investment director Russ Mould.

"The impact of geopolitical events on markets, and the macro outlook, hinges more on when transits through the Strait of Hormuz begin to normalise than it does on when hostilities come to an end," wrote Michael Brown at Pepperstone.

The London, Paris and Frankfurt stock markets all rose on Monday, but analysts warned that market sentiment remained fragile.

In Asia, Tokyo and Shanghai closed lower, while Hong Kong rose.

During Asian trading hours, crude had climbed further above $100 a barrel after attacks on oil infrastructure on the UAE's east coast and strikes on Iran's Kharg Island.

Iran's Foreign Minister Abbas Araghchi told CBS his country was not interested in talks with Washington, but was ready to speak to countries about safe passage through the Strait of Hormuz.

More strikes occurred Monday, with Saudi Arabia saying it had intercepted more than 60 drones since midnight, while flights were temporarily suspended at Dubai's airport after a "drone-related incident" sparked a fire nearby.

Traders' attention will turn this week to policy meetings of major central banks including the US Federal Reserve, Bank of England, the European Central Bank and the Bank of Japan.

While they are expected to keep interest rates unchanged, any remarks on the impact of the war and rising energy prices on their respective economies will be closely followed.

"Investors want to hear what the world’s central bankers think about a potential inflation shock and a prolonged energy crisis and how this feeds into their future decision making," said Kathleen Brooks, research director at trading group XTB.

Japan said Monday it was beginning to release strategic oil reserves, after International Energy Agency members agreed last week to tap oil stockpiles to cushion the surge in prices caused by the war.

- Key figures at around 1410 GMT -

West Texas Intermediate: DOWN 5.1 percent at $94.02 per barrel

Brent North Sea Crude: DOWN 2.2 percent at $100.90 per barrel

New York - Dow: UP 1.3 percent at 47,136.53 points

New York - S&P 500: UP 1.3 percent at 6,717.33

New York - Nasdaq Composite: UP 1.5 percent at 22,439.09

London - FTSE 100: UP 1.1 percent at 10,372.33

Paris - CAC 40: UP 0.7 percent at 7,963.28

Frankfurt - DAX: UP 1.0 percent at 23,686.02

Tokyo - Nikkei 225: DOWN 0.1 percent at 53,751.15 (close)

Hong Kong - Hang Seng Index: UP 1.5 percent at 25,834.02 (close)

Shanghai - Composite: DOWN 0.3 percent at 4,084.79 (close)

Euro/dollar: UP at $1.1501 from $1.1416 on Friday

Pound/dollar: UP at $1.3308 from $1.3223

Dollar/yen: DOWN at 158.88 yen from 159.74 yen

Euro/pound: UP at 86.41 pence from 86.33 pence

(F.Schuster--BBZ)