Oil rises, stocks mixed as new US strikes dampen peace deal optimism

Oil prices surged on Tuesday after U.S. strikes in southern Iran undermined optimism for an imminent peace deal with Tehran. Brent crude futures rose over 1% to $97.32 a barrel, while U.S. West Texas Intermediate crude saw modest gains despite a 5.5% drop from Friday’s close. The U.S. conducted defensive strikes on Monday targeting boats laying mines and missile launch sites, complicating negotiations in Doha where Iran’s top negotiator and foreign minister met Qatar’s prime minister to discuss a potential deal. Stock markets reacted unevenly, with MSCI’s Asia-Pacific index outside Japan advancing 0.8%, while Japan’s Nikkei fell 0.2%. Nasdaq futures rose 0.9%, and S&P 500 futures climbed 0.68%, though European indices like the EUROSTOXX 50 and DAX futures saw slight declines. Analysts noted that while investors hope for a quick resolution, lingering uncertainty about deal specifics—such as the reopening of the Strait of Hormuz—keeps markets on edge. The dollar steadied amid renewed safe-haven demand, though it remained below a six-week peak. The euro dipped to $1.1636, sterling eased to $1.3498, and the yen held steady against the dollar at 158.95. Bond yields remained largely unchanged after last week’s volatility, with the 10-year U.S. Treasury yield at 4.5024% as fears of sustained inflation persisted. Gold prices dropped 0.5% to $4,545.90 an ounce, reflecting mixed risk sentiment. Analysts warned that geopolitical risks could ease temporarily, but inflation and fiscal pressures would likely keep borrowing costs elevated. Commodity supply disruptions and fiscal support measures were cited as factors that could prolong economic strain. The Nikkei reported that U.S. and Iranian negotiators were discussing a plan to reopen the Strait of Hormuz roughly 30 days after a deal to end hostilities, though no timeline was confirmed. The uncertainty surrounding the talks and ongoing military actions has left markets cautious, with oil and stocks reacting to shifting expectations.