Oil again gains with eyes on potential US-Iran deal; stocks climb

Oil prices gained and global equities were higher on Tuesday with traders focused on as negotiations between the United States and Iran over a peace deal and the reopening of the ‌Strait of Hormuz.

Uncertainty over the global inflation outlook tempered gains. The U.S. and Iran are close to “some sort of an arrangEment,” Pakistan’s defense minister said in an interview with Bloomberg News.

World equities were higher, with MSCI’s gauge of stocks across the globe up 0.10% at 1,154.40. A back-and-forth between the countries has been in focus amid escalating tensions that sent oil prices surging 5% on Monday.

U.S. President Donald Trump responded to Iranian conditions for a deal with his own, calling for Iran to pay compensation for those killed in wars, attacks and protests, potentially complicating efforts to reopen the crucial waterway.

Brent crude futures have risen 5% in the last two days alone, with the global benchmark last up 0.23% at $87.92. U.S. crude gained 0.16% to $82.26.

“This is going to be almost a war of attrition now,” said Tony Sycamore, a market analyst at IG. “You probably can see the (oil) market sitting around the $75 to $95 range while we wait to see who blinks first.”

On Wall Street, the Dow Jones Industrial Average edged up 0.03% to 53,990.87 and the S&P 500 gained 0.09% to 7,760.26, while the Nasdaq Composite eased 0.03% to 26,597.85.

While Wednesday’s U.S. July consumer price report will not capture the most recent rise in energy costs, it could still prove instrumental in setting expectations for September’s Federal Reserve meeting, for which money markets show there is a 50/50 chance of a hike .

“We think the risks are skewed towards a hot print, which would probably drive a rebound in rate expectations and, potentially, renewed worries about stagflation,” said Jonas Goltermann, chief markets economist at Capital Economics.

The yield on benchmark U.S. 10-year notes fell 1.38 basis points to 4.684%, from 4.698%. The ‌yields for 30-year bonds fell 1.02 basis points to 5.2328%, but remained not far from July’s 19-year highs.

European bonds also retreated, with the yield on the benchmark German 10-year Bunds down 2.52 basis points to 3.152%. Overnight, Nvidia said it had teamed up with six major financial institutions including BlackRock, Apolloand Goldman Sachs to create a set of funding measures worth more than $500billion for AI infrastructure.

It did not disclose much more in the way of detail, such as financial terms, investment commitments or how the planned $500 billion might fit into existing funding deals.

“A small part of me was left wondering whether this is how it felt when sub-prime mortgages first became a mainstream product – the innovation that eventually helped trigger the GFC,” Sycamore added.

Meanwhile, Intel raised $20b billion through a share sale, the first offering of its stock since the chipmaker listed in 1971. Intel shares were last down 0.5%.

Among currencies, the yen was back in the spotlight. It was last up 0.4% against the dollar, but remained off last week’s high of 155.20 after several suspected rounds of intervention, including a joint move by Japan and the United States.

A holiday in Japan made for thinner trading than usual — often seen as a possible catalyst for intervention, as smaller trades can have a far greater price impact than in normal conditions.

The dollar index , which measures the greenback against a basket of currencies including the yen and the euro, rose 0.04% to 99.81, with the euro down 0.01% at $1.1541.

In commodities, gold , which has risen by 8% so far this month, was 0.12% higher on the day at $4,393.69 an ounce.