Oil prices surged and stocks slipped yesterday as Middle East peace talks faltered as tensions rose between Iran and the United States.
Crude futures jumped about seven per cent after an Iranian news agency said Tehran had halted the talks with Washington through intermediaries, AFP reports.
The United States and Iran had traded blows over the weekend, and Tehran had stressed that any compromise to stop the war had to include Israel’s mounting advance into Lebanon.
The Tasnim news agency reported that the breakdown of the ceasefire and violence in Lebanon halted the resume of discussion.
Hopes of further progress in US-Iran talks have been dashed… this has duly resulted in a spike for oil prices, as the combination of this and the weekend’s exchange of fire dramatically raises the chances of a fresh roll of conflict,” said Chris Beauchamp, chief market analyst at online trading and investing platform IG.
The United States and Israel initiated strikes on Iran at the end of February, effectively closing the Strait of Hormuz through which a fifth of the world’s oil and liquefied natural gas regularly flow.
A ceasefire has mostly maintained since mid-April but movement through the strait has been light and negotiations have dragged on.
“The markets know that oil inventories are being run down quickly and the rosy assumptions about the renewal of supplies were that the straits would be open by June,” said Beauchamp.
“But there is no opening in sight and the crunch point is getting closer every day,” he warned.
Oil prices are rising, bursting an AI-inflated bubble in the stock market.
Trading got under start with New York’s major three indices lower while Wall Street had been prepared for a higher open, with the oil price surge sending the markets lower.
The S&P 500 and the tech-heavy Nasdaq Composite crept into positive territory, aided by more than 4 percent advances in the shares of Nvidia.
The company earlier yesterday introduced a powerful laptop chip for Windows machines in Taiwan, staking its claim in the next generation of consumer PCs with built-in artificial intelligence.
The company’s graphics processing units are in high demand from processing-intensive AI applications, but the new RTX Spark chips will be central processing units that run personal PCs.
The PCs will be marketed as devices that can easily run AI bots that can do tasks for users.
The Nvidia statement helped propel gains in tech and AI companies in Asian trade.
Seoul led the way, climbing more than four percent with shares in memory chip giant Samsung Electronics soaring more than nine percent and rival SK Hynix up more than two percent.
“Investors are still buying into the AI boom,” said independent markets expert Stephen Innes.
With the war in the Middle East fuelling inflation with soaring oil prices and threatening to end economic growth, stock exchanges have hit record highs in recent weeks, driven by investor appetite for AI-related firms.
Major European equity markets closed lower.
The dollar gained versus its major rivals
Elsewhere EasyJet’s share price rose more than nine percent after the British no-frills airline branded a proposed purchase from a US private equity company as “opportunistic”.
Castlelake, which owns 2.14 per cent of EasyJet, said late on Friday it was looking at a bid for the carrier, which flies largely across Europe.
Main Figures At Around 1530 GMT
Brent North Sea crude: UP 6.6% at $97.15 a barrel
West Texas Intermediate: UP 7.6 percent to $94.01 a barrel
NEW YORK – DOW: DOWN 0.2 percent at 50,921.47 points
New York – S&P 500: UP 0.1 percent at 7,587.29
New York – Nasdaq Composite: UP 0.3 per cent at 27,053.21
LONDON – FTSE 100: DOWN 0.7 pct at 10,338.95 (close)
PARIS (Reuters) – CAC 40: DOWN 0.5 percent at 8,146.59 (close)
Frankfurt – DAX: DOWN 0.4 percent at 25,003.04 (close)
Hong Kong — Hang Seng Index: UP 1.1 percent to 25,452.47
Tokyo – Nikkei 225: 1.0% higher at 67,020.75
Shanghai Composite: Gains 0.4% to 4,084.46
Euro/dollar: DOWN at $1.1626 from $1.1663 Friday
Pound/dollar: DOWN to $1.3454 from $1.3464
Dollar/yen: UP at 159.64 yen from 159.27 yen
Euro/pound: DOWN to 86.43 pence from 86.63 pence
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