Markets Rally as Easing Mideast Tensions Push Crude Prices Lower
Global stocks rose on Tuesday, underpinned by gains in technology stocks, as investors waited for corporate earnings this week that could test an AI trade under pressure, while mediation efforts in the Middle East kept oil prices in check.
The U.S. and Iran traded fresh fire, and Yemen’s Tehran-aligned Houthis said they would impose a naval blockade on Saudi Arabia, which risks further disrupting energy supplies and pushed oil back above $90 a barrel. Gains in crude were limited by optimism that the two sides could revive a fragile ceasefire.
A senior Iranian official told Reuters on Monday that Tehran had received a proposal from mediators for a 10-day ceasefire, intended to pave the way for a lasting agreement to end the war that began on February 28 with U.S.-Israeli attacks on Iran.
Brent crude futures were choppy on Tuesday, trading slightly higher at $90.86 per barrel, nearing the previous day’s one-month high above $91.
“It seems to suggest that this isn’t a total breakdown. There are still channels for sort of talks to go on, which is great news. Just quite how successful they will be is another matter,” said David Morrison, a senior market analyst at Trade Nation.
Gains in tech stocks (.SX8P), kept Europe’s STOXX 600 (.STOXX)afloat, while futures tracking the tech-heavy Nasdaq led gains on Wall Street with a 1.3% rise. Chip stocks including those of Micron Technology (MU.O) and Marvell (MRVL.O) were about 6% higher in premarket trading.
Trade was also in the spotlight after a Financial Times report said that President Donald Trump was planning on unleashing fresh duties on several countries this week, just hours after he slapped 50% tariffs on Canadian imports worth about $20 billion.
“I suppose there’s a feeling that it’s going to be watered down, and ultimately, it’s certainly not going to happen to the tune of 50%,” Morrison said earlier of Trump’s tariff threat against Canada.
AI’S EARNINGS TEST
Investor focus this week will be on earnings from companies including Alphabet (GOOGL.O) and Intel (INTC.O), opens new tab to gauge the impact of the war and whether the AI trade has more room to run, given sky-high profit expectations for the second quarter.
July has been a rough month for global tech stocks, as strong earnings from Asian chip bellwethers Samsung Electronics (005930.KS) and TSMC (2330.TW) in recent weeks did little to assuage concerns about high valuations and earnings growth.
“While market volatility may pick up as investors assess the ongoing risks, we see a constructive macro and earnings backdrop that should continue to support global equities in the coming months,” UBS analysts wrote in a note.
Escalating U.S.-Iran tensions have revived worries about inflation and pushed Treasury yields higher. The 2-year note yield, which typically moves in step with Federal Reserve interest-rate expectations, was at 4.2%, down 1 basis point on the day, following Monday’s selloff, which pushed yields up 4 basis points.
Traders are pricing in at least one rate hike from the Fed this year, and a roughly 20% possibility of a second, according to money markets.
The dollar hovered near one-week highs against a basket of major currencies . The euro last bought $1.142, while the Japanese yen was at 162.74 per dollar, still within sight of 40-year lows, which is keeping traders on alert for intervention from Tokyo.
Sterling was the worst-performing major currency, as investors awaited the new government’s fiscal plans following the unexpected announcement of John Healey as the UK’s new finance minister. The pound was down for a fourth day, last trading at $1.341, down 0.2% .
Reporting by Ankur Banerjee in Singapore and Johann M Cherian in Bengaluru; Editing by Kate Mayberry, Amanda Cooper and Anil D’Silva
This article was first reported by Reuters
