Trading Day: Banking on oil relief

ORLANDO, Florida, March 16 (Reuters) - Wall Street notched solid gains on Monday led by tech, while the dollar and bond yields fell, as volatile oil prices eventually settled lower on the bet - perhaps more in hope than expectation - that the supply crunch from the Middle East could soon ease.

More on that below. In my column today I look at the historic week in monetary policy now underway, the first week since 2021 that the ’G4’ central banks are meeting, and only the second ever. The global rate repricing since war broke out in the Middle East has been aggressive. Too aggressive?

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. US allies rebuff Trump’s request for support in Straitof Hormuz 2. Fed to present an updated outlook looking through thefog of war 3. Trump-Xi meeting not in jeopardy but could be delayed,White House says 4. Nvidia CEO Huang sees at least $1 trillion of AI chiprevenue opportunity through 2027 5. Cuba’s national electric grid collapses, leavingmillions without power

Today’s Key Market Moves * STOCKS: Asia mixed: South Korea +1.7%, Japan -0.5%.Europe +0.5%, solid gains on Wall Street. S&P 500 +1%, Nasdaq+1.2%. * SECTORS/SHARES: All 11 sectors in the S&P 500 rise. Tech+1.4%, consumer discretionaries +1.3% Meta +2.2%, Nvidia +1.6%. * FX: Dollar index -0.6%, biggest fall in a month. Aussie,Kiwi dollars biggest G10 gainers, both +1.4%. Brazil, SouthAfrica, Mexico FX +1.5%, bitcoin +4%. * BONDS: U.S. yields fall as much as 7 bps, curve bullflattens slightly. Fed rate cut by year-end fully priced again. * COMMODITIES/METALS: Oil down 3%-5%, gold flat butplatinum and palladium +4%. Average U.S. gas $3.72/gallon, +27%in past month.

Today’s Talking Points

* Trump calls on "allies"

Several traditional U.S. allies have said they have no plans to assist the U.S. in trying to re-open the Strait of Hormuz, which would get tankers moving again and help lower the price of oil. A number of countries including Germany, Italy and Spain, have rebuffed President Trump’s call for help.

German Chancellor Friedrich Merz said there is no mandate from the UN, EU or NATO, adding that Washington didn’t consult Germany before launching the war. Earlier this year, Trump alienated European and NATO allies by threatening to take Greenland. Relations are strained, and cooperation will require a lot more negotiation.

* Dollar and global rate reprice

The dollar had its biggest fall in over a month on Monday, dragged down by sliding Treasury yields and U.S. rates traders moving back to fully pricing in a Fed rate cut by year-end. Its losses against the Aussie and kiwi dollars were particularly large.

Don’t be surprised, however, if these dynamics quickly reverse and FX volatility stays elevated this week, as the Fed and seven other G10 central banks meet. First up is the RBA on Tuesday. Even if none or just the RBA changes rates, that’s a lot of guidance and signaling for markets to digest.

* U.S.-China ties under spotlight

U.S. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng have led ’candid and constructive’ talks in Paris, laying out possible ’deliverables’ for Presidents Trump and Xi Jinping at their summit in Beijing scheduled for March 31-April 2.

Whether that summit takes place when planned is now in doubt, after Bessent and the White House said it might be postponed if Trump needs to stay in Washington to prosecute the war on Iran. The summit is two weeks away. It could be a very long two weeks.

What could move markets tomorrow? * Developments in the Middle East * Energy market moves * Australia interest rate decision, Governor MicheleBullock holds press conference * Indonesia interest rate decision * Germany ZEW investor sentiment index (March) * U.S. pending home sales (February) * U.S. Treasury sells $13 billion of 20-year bonds atauction * U.S. Federal Reserve begins two-day policy meeting

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