Oil dips, stocks mixed after Trump holds off on Iran attack

AFP | London

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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% 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,” said 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.