Oil Prices Drop Amid Easing Tensions as Markets Await Fed Decision
Oil prices fell sharply after Iran announced a suspension of attacks, provided the US maintains a cessation of hostilities. Meanwhile, investors are bracing for the Fed's interest rate decision and a busy week of earnings reports.
Following Iran's announcement that it would suspend attacks as long as the US continues the cessation of hostilities, Brent crude fell 4.6% to $92.3 per barrel, and WTI dropped 5% to $85 per barrel. Amid easing geopolitical tensions, Nasdaq futures rose 1.2%, S&P 500 futures gained 0.7%, and Dow Jones futures climbed 0.6%. In Asia, markets showed mixed results: the Nikkei index fell 0.1%, Kospi dropped 1.3%, while the Hang Seng rose 0.7%.
Optimism on Wall Street and Bond Yields
Optimism prevails in the American market, fueled by hopes for a de-escalation of the conflict. The yield on 10-year US Treasury bonds fell by 4 basis points to 4.64%.
Fed Decision and Corporate Earnings
This week, market attention is focused on the Fed's decision on Wednesday. Markets are pricing in a 38% probability of a 0.25% interest rate hike, compared to 13% last week.
The coming days will be packed with financial reports:
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Wednesday: Microsoft and Meta (after the close), Teva (before the opening).
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Thursday: Apple and Amazon (after the close), Mastercard (before the opening).
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Friday: Energy giants Chevron and ExxonMobil (before the opening).
Asian Market Developments
In Asia, the decrease in war-related concerns led to a correction in energy prices. Japanese cosmetics giant Shiseido soared 7.5%, and Nintendo rose 5.7%. In Seoul, Naver shares jumped 9% following news of a partnership with Nvidia. In China, chip manufacturer Changxin Technology Group (CXMT) made a spectacular debut on the STAR market: shares surged approximately 470% on their first trading day, making it the company with the highest market capitalization in China, valued at 3.3 trillion yuan ($490 billion).
