Stocks steady amid Middle East uncertainty

The MSCI All-World index was relatively flat on the day, while in Europe, the STOXX 600 and U.S. stock futures were also steady

Stocks flatlined, while the dollar firmed on Monday as investors fretted that talks between Iran and the US and were at a stalemate, leaving the vital Strait of Hormuz virtually closed, which sent oil prices higher.

The U.S. president on Sunday rejected Iran’s response to the country’s proposal for peace talks to end the war, saying Tehran’s demands were “totally unacceptable”.

Brent crude futures, which are around 45% higher than ​they were before the U.S. and Israel ‌began strikes on Iran on February 28, climbed 4.6% overnight and ​were last at $103 a barrel, showing a 2% gain on the day.

The MSCI All-World index was relatively flat on the day, while in Europe, the STOXX 600 and U.S. stock futures were also steady.

Markets are very good at assimilating this and learning to live with things that we ‌thought were impossible. And that’s where we are with crude right now. But if it goes up another 50%, then that will be another test that we have to navigate, IG chief market strategist Chris Beauchamp said.

If you’re looking at the earnings data, it’s really ‌good. And were it not for the Iran situation, we would be really firing on all cylinders, ‌even more so than we are. But people are content to believe that, somehow, there has ‌to be some kind of deal with Iran, however ugly, he said.

An Iranian plan sent to the U.S. stressed the need for an end to the war on all ‌fronts ‌and the lifting of sanctions on Tehran, along with reparations and a recognition of Iran’s control of the Strait, Iranian media reported.

The conflict in the Middle East is now entering its 11th week, said Bruce Kasman, global head of economics at ⁠JPMorgan. Energy prices have surged but remain at levels that are headwinds rather than expansion-ending obstacles.

The ‌risk of a sharper move rises with each week that the Strait of Hormuz stays closed, and our commodities team sees operational stress levels starting ‌sometime in June, he said.

The dollar edged up modestly, adding 0.2% on the yen to 156.9 yen, while the euro slipped 0.1% to $1.1778 and sterling dropped 0.16% to $1.3613.