London (AFP) – Oil prices eased Tuesday but remained above $100 a barrel while stocks wavered as investors tracked a potential deal between the US and Iran to end a war that has sent energy prices soaring. Rising government bond yields also weighed on sentiment, with the yield on 30-year US Treasuries hitting its highest level in nearly 19 years. The move indicated growing market unease over inflation, energy prices, and fiscal worries.
President Donald Trump said he held off a major new assault against Tehran as he saw hopes for securing an agreement to end the conflict, which was sparked by US and Israeli strikes on Iran at the end of February. Stocks didn’t get much of a boost from Trump’s announcement, with Wall Street’s major indices lower in late morning trading. European indices ended the day mixed.
“Investors are showing relief that tensions haven’t escalated,” said Russ Mould, investment director at AJ Bell. He added, however, that “oil prices remain at high enough levels to weigh on the global economy.” Brent crude, the international benchmark, hovered at around $110 a barrel, down from Monday’s prices but still up more than 50 percent since the outbreak of the Middle East war.
Michael Wan of financial group MUFG said, “the durability of this de-escalation — and whether it translates into a sustained decline in oil prices — remains the single most important driver for global bond yields.” Investors are also nervously eyeing rising yields for government bonds in major economies including the US and Japan, indicating that investors are selling amid fears inflation will hinder economic growth.
“Markets have begun to integrate a much more inflationary outlook linked to sustained higher oil prices,” said John Plassard, an analyst at Cite Gestion Private Bank. The divergence between bond investor worries and stock market enthusiasm for strong corporate earnings and the AI-fuelled tech boom is increasingly prompting caution. Higher bond yields point towards higher borrowing costs which could make it more difficult for many firms, particularly for those needing to finance massive investments into AI.
Investors will now be looking to Wednesday’s quarterly results from US chip titan Nvidia to see whether huge spending on AI data centres is justified by potential returns. “The chip giant’s outlook for sales and its assessment of the uptake of enterprise AI will be vital for the next stage of the tech trade,” said Kathleen Brooks at XTB.
Tech stocks in Asia retreated, tracking a slump on Wall Street on Monday. In South Korea, artificial intelligence heavyweight SK hynix slid more than five percent and Samsung Electronics fell by around one percent. The Hong Kong and Shanghai stock markets advanced while Tokyo’s Nikkei 225 closed modestly lower even though Japan reported its gross domestic product expanded 0.5 percent in the first quarter, exceeding market forecasts.
In other corporate news, shares in Standard Chartered slid 2.2 percent as the British bank revealed plans to axe thousands of jobs with a deployment of AI to replace employees in a range of administrative roles.
– Key figures at around 1530 GMT –
Brent North Sea Crude: DOWN 1.6 percent at $110.27 a barrel
West Texas Intermediate: DOWN 1.2 percent at $103.14 a barrel
New York – DOW: DOWN 0.5 percent at 49,424.33 points
New York – S&P 500: DOWN 0.9 percent at 7,339.51
New York – Nasdaq Composite: DOWN 1.3 percent at 25,759.40
London – FTSE 100: UP less than 0.1 percent at 10,330.55 (close)
Paris – CAC 40: DOWN less than 0.1 percent at 7,981.76 (close)
Frankfurt – DAX 30: UP 0.4 percent at 24,400.65 (close)
Tokyo – Nikkei 225: DOWN 0.4 percent at 60,550.59 (close)
Hong Kong – Hang Seng Index: UP 0.5 percent at 25,797.85 (close)
Shanghai – Composite: UP 0.9 percent at 4,169.54 (close)
Euro/dollar: DOWN at $1.1596 from $1.1650 on Monday
Pound/dollar: DOWN at $1.3392 from $1.3422
Euro/pound: DOWN at 86.58 from 86.77 pence
Dollar/yen: UP at 159.16 from 158.93 yen
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© 2024 AFP
