By Bill Curry
Markets Weigh Fallout from Iran Nuclear Deal
The fate of the Iran nuclear deal was top of mind for many investors this week as they contemplated how the U.S.’s withdrawal from the deal would impact inflation, oil prices and stability in the Middle East—just to name a few. As promised, U.S. President Donald Trump on Tuesday announced his decision to withdraw the U.S. from the accords, despite objections from a range of key allies. Trump’s move sent oil prices on Thursday to their highest levels in three-and-a-half years, as markets weighed uncertainty over oil supplies in an already tight market. The spike in oil also stoked investor concerns about the threat of inflation and its possible impact on the Fed’s planned rate hikes for the remainder of 2018. Those fears subsided somewhat as U.S. Consumer Price Index data released Thursday showed prices rose less than expected in April. The data was good news for U.S. government bonds, which gained Thursday, as the yield on the benchmark Treasury 10-year note fell below 3%. In Canada, rising oil prices helped lift the energy sector, driving Canada’s main index higher. In NAFTA news, officials from Canada and Mexico are meeting again with their U.S. counterparts in Washington this week under serious pressure to broker a deal by June 1. Turning to Europe, stocks stalled on Thursday after four sessions of gains, while the Bank of England left its key interest rate at 0.5%, in light of a slowdown in economic growth over Q1. An unusually severe blast of cold weather over the first three months of 2018 has been blamed for the chilling effect on many of Europe’s largest economies.
A bounce-back week for equities
Despite initial inflation concerns, North American equities headed higher. For the four days covered in this report, the Dow gained 477 points to close at 24,740, the S&P 500 climbed 60 points to end at 2,723 and the Nasdaq rose 195 points to settle at 7,405. Lifted by a strengthening energy sector, the TSX added 230 points to finish at 15,960.
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