investingLive European markets wrap: Oil holds lower despite Iran refuting Trump claims

Headlines:

Markets:

  • WTI crude down 6% to $79.56
  • JPY leads, AUD lags on the day
  • European indices sit higher; S&P 500 futures up 0.6%
  • US 10-year yields down 7 bps to 4.675%
  • Gold up 0.2% to $4,047
  • Bitcoin down 1.2% to $62,668

It is a case of déjà vu for markets as the US-Iran conflict continues to play out in the new week.

Iran is out to refute US president Trump’s claims that a deal to reopen the Strait of Hormuz is imminent, insisting that it is just an arrangement between themselves and Oman. Adding that they are nowhere close to any stage of speaking with the US on nuclear talks.

However, we’ve seen this sort of dance before between the two. And eventually, that led to a ceasefire deal back in June. That is not to say that we’re headed for better fortunes down the road. But at least for now, it looks like things will de-escalate for a moment before taking a turn for the worse again, as it did in July.

Oil prices are holding lower, with WTI crude down 6% to $79.56 and Brent crude down 5% to $83.46 on the day.

Meanwhile, bond yields are also coming off the boil and that’s keeping markets in check to start the new week. 10-year yields in the US are down some 7 bps to 4.67% as cooler heads prevail for now.

That said, the dollar is holding its own after the fall on Friday – which owed much to USD/JPY joint intervention between US and Japan authorities. The warnings continue to reverberate in the new week and while USD/JPY is down 0.4% to 156.88, it is much higher than the low of 155.23 earlier in the day. Elsewhere, the dollar is trading steadier and holding just marginal gains on the day.

In other markets, equities are keeping the faith with major indices in Europe posting 1% gains and S&P 500 futures seen up 0.6%. Tech shares will continue to come under heavy scrutiny, so keep an eye out on the Nasdaq in the days ahead.

As for precious metals, gold is up just 0.2% to $4,047 as the push and pull there continues amid the fluctuating sentiment on US-Iran developments.

This article was written by Justin Low at investinglive.com.

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