MARKETS ALL – Oil jumps, stocks mixed after Iran denies claim it stopped US warship

* IS&P500 index dips, Nasdaq notes higher

* Oil increased by more than 2%

* Busy earnings week includes AMD, Super Micro

* Payroll data to shape Fed policy outlook (Updates on US markets open)

May 4 (Reuters) – Brent crude jumped nearly 2% on Monday and the dollar strengthened amid conflicting reports from Iran and the US about US warships in the Strait of Hormuz.

US stocks were mixed, with the Dow Jones Industrial Average down 0.5%, the S&P 500 down 0.05%, and the Nasdaq Composite down 0.12%.

Iran’s navy blocked “American Zionist” warships from entering the Strait of Hormuz on Monday, state TV reported, while the Fars news agency said two missiles hit a US warship near Jask in the Gulf of Oman after it ignored Iran’s warnings.

Reuters could not independently verify the reports. The US military said two US Navy guided-missile destroyers entered the Gulf to break the Iranian blockade and that two US ships had passed through the Strait of Hormuz.

IRANIAN WARNING WE FORCE

Iran’s military earlier warned US forces not to enter the Strait of Hormuz after President Donald Trump said the US would begin helping free ships stuck in the Gulf as a result of the US-Israel war against Iran. He gave a few details of the plan.

US crude ended up 0.1% at $102.03 a barrel and Brent rose to $110.36 per barrel, up 2% on the day.

Analysts said, however, that the high prices did not last long because of their impact on demand and the economy.

“The market is being pulled in two opposing directions at the moment: on the one hand, geopolitical risks increase oil and renew fears of inflation, but on the other, fundamental growth, especially in the US, is slowing down,” said Bruno Schneller, managing partner at Erlen Capital Management, a multi-family office.

The combination was driving some of the biggest markets on record in stocks, bonds and funds, he added.

MSCI’s broadest index of global shares outside Japan rose, led by gains in Asian stocks with tech-heavy South Korean stocks closing more than 5% higher. Hong Kong’s Hang Seng index gained 1.2%.

In Europe, German automakers’ performance weakened the region’s start to the week after Trump said on Friday that Washington would raise tariffs on European cars and trucks.

The pan-European STOXX 600 index ended down 0.6%. The yield on Germany’s 10-year bond, the euro zone bloc’s benchmark, ended up 2 basis points at 3.052%. Bond yields move inversely with prices. Markets in London were closed for a public holiday.

CENTRAL BANKS WARN OF DANGERS OF FINANCIAL POWER

As another tough earnings week began, concerns remained about the estimated investment in artificial intelligence, now at $751 billion in 2026, $80 billion more than estimates at the start of earnings season and 83% more than spending in 2025.

Companies reporting this week include Advanced Micro Devices, Super Micro Computer, Palantir, Walt Disney and McDonald’s.

“Looking at last week, the market’s recipe for a bullish market will be to avoid negative surprises from the Middle East to allow a stronger-than-average earnings season to continue to dominate sentiment,” said Chris Larkin, managing director of trading and investing at Morgan Stanley’s E*TRADE, on Monday.

The threat of oil-driven inflation has also lifted bond yields in a challenge to benchmark rates, while several central banks have reversed policy.

Market participants still do not expect the US Federal Reserve to cut rates this year and are expecting interest rate hikes from the European Central Bank and the Bank of England.

Barclays on Monday joined brokerages betting the Fed will not ease rates this year.

Data this week, including Friday’s April payrolls report, could change the Fed’s view.

The yield on the benchmark US 10-year note rose 3.6 basis points to 4.414%, from 4.378% late on Friday.

FOREX MARKETS WARNED OF YEN INTERVENTION

In the forex markets, traders remain on edge over possible Japanese intervention to boost the yen.

The yen jumped in Asian trade, with the dollar falling sharply before paring some of the losses. Traders were cautious after some market players believed Tokyo had entered the market last week.

The dollar ended lower against the yen at 156.98, having fallen as low as 155.7 yen earlier, as traders fretted over possible interventions that analysts thought would be around $35 billion.

“But the fundamentals are still in favor of USD/JPY, which means USD/JPY will recover soon and enforce the MoF’s (minister of finance) again,” said Carol Kong, currency strategist at the Commonwealth Bank of Australia, who added that given the magnitude of Monday’s moves, she doubts Japan is distracted.

The euro fell 0.04% to $1.17, while sterling fell to $1.356. The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.11%.

In commodity markets, gold fell more than 1% to $4,565 an ounce. (Reporting by Lawrence Delevingne in Boston, Nell Mackenzie in London and Wayne Cole in Sydney. Additional reporting by Ankur Bangerjee in Singapore. Editing by Dhara Ranasinghe, Barbara Lewis and Mark Potter)

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