Wall Street edges lower, oil prices volatile after Trump warns the Iran 'clock is ticking'

Oil prices were up more than 1% for a short time overnight after Trump warned Iran in a social media post that “the Clock is Ticking, and they better get moving, FAST, or there won’t be anything left of them” following a call with Israeli Prime Minister Benjamin Netanyahu.

Trump has set deadlines for Iran and then backed off, so investors have remained cautious about the situation in the Strait of Hormuz and how it is impacting global energy flows, including oil and gas. The strait is still mostly closed, and the U.S. has also imposed its own sea blockade on Iranian ports since last month.

A drone strike over the weekend on a United Arab Emirates’ nuclear power plant added to worries over a potential escalation in the conflict.

Brent crude, the international standard, lost 6 cents to $109.20 per barrel. It was trading at roughly $70 a barrel in late February before the start of the Iran war. Benchmark U.S. crude was down 31 cents to $105.11 per barrel.

“Re-escalation risks are increasing,” ING commodities strategists Warren Patterson and Ewa Manthey wrote in a research note. While there has also been a pick up on shipping activities over the past week around the strait, they said, “this can change quickly.”

The pair also noted that the oil market was reacting to the lack of tangible results on the Iran war after last week’s widely-watched summit between Trump and Chinese President Xi Jinping in Beijing, even as the White House said both the U.S. and China had agreed that the Strait of Hormuz must remain open.

U.S. officials had hoped that Beijing could use its influence, given its economic ties with Iran, to help broker a peace agreement and reopen the strait. Trump said last week in an interview that Xi told him China “would like to be of help” in negotiating an end to the war. So far it’s been unclear how Beijing might do that.

This week brings little in the way of economic data, however, a handful of major U.S. retailers will be posting their latest financial results, along with chipmaker and AI bellwether Nvidia.

Target, Home Depot and Walmart all report their first quarter results later this week. Last week, the government reported that Americans tempered their spending in April as higher gas prices fueled by the Iran war left them with less money to spend on nonessentials. Despite that, Americans did keep spending last month, thanks in part to more generous government tax refunds.

Still, economists worry that spending will drop more dramatically in the coming months as tax refunds run out and shoppers continue to grapple with gas prices that have risen more than 50% since the war began in late February.

Dominion Energy soared more than 14% in premarket after the company announced it was merging with another East Coast energy giant, NextEra Energy. The all-stock deal, valued at about $67 billion, was sparked by a growing demand for power needed to run data centers.

Elsewhere, in Europe, Britain's FTSE 100 climbed 0.7% by midday, while Germany’s DAX added 0.2% and France's CAC 40 lost 0.8%.

During Asian trading, Tokyo’s Nikkei 225 fell 1% to 60,815.95, a decline led by technology-related stocks. It reached all-time intraday high levels last week above 63,000.

The yield on the 10-year Japanese government bond surged to as high as 2.8%, its highest level since the late 1990s. That's part of a broader shift toward higher yields as the Bank of Japan gradually raises interest rates and higher energy costs raise expectations of rising inflation. The yield was around 2.55% just one week ago.

Seoul’s Kospi climbed 0.3% to 7,516.04 after trading lower earlier in the day. It crossed the 8,000 mark for the first time on Friday, supported by buying of technology shares driven by the boom in artificial intelligence, but later declined partly on profit-taking by investors.

Hong Kong’s Hang Seng lost 1.1% to 25,675.18. The Shanghai Composite index edged 0.1% lower to 4,131.53, after China reported weaker-than-expected economic data for April.

Australia’s S&P/ASX 200 declined 1.5% to 8,505.30.

Taiwan’s Taiex dropped 0.7%, while India’s Sensex fell less than 0.1%.