Oil prices rose on Tuesday after negotiations between the US and Iran over a peace deal and the reopening of the Strait of Hormuz stalled, prompting Hong Kong and Asian markets to remain cautious. Brent crude futures reached $88 a barrel while US crude rose to $82.45, both their highest levels since July 31, after gaining about 5% on Monday.
The latest oil rally has renewed concerns over inflation ahead of the US July consumer price report due on Wednesday. Capital Economics chief markets economist Jonas Goltermann said the risks were skewed towards a hotter-than-expected reading, which could revive rate hike expectations and raise concerns over stagflation.
“We’re now in a bit of a Mexican standoff, if you’d like, in terms of who blinks first,” said Tony Sycamore, a market analyst at IG. He expects oil prices could remain between $75 and $95 while markets wait for a breakthrough.
Asian shares remained subdued, with MSCI’s broadest index of Asia-Pacific shares outside Japan last up 0.2% and South Korea’s Kospi gaining 0.3%. Nasdaq futures rose 0.28% while S&P 500 futures added 0.1%.
The yen also returned to focus, trading near 159 per dollar after recent suspected intervention by Japanese and US authorities. Nomura analysts said the market remained alert to further intervention, making a move above 160 in the near term unlikely.
The dollar gained marginally from higher oil prices, while the euro traded at $1.1546 and sterling at $1.3512. Spot gold rose 0.5% to $4,409.81 an ounce.
Reuters
