Oil prices declined on Tuesday as global stock markets showed volatility and bond yields steadied after US President Donald Trump announced he had suspended a planned military strike on Iran. He also indicated a “very good chance” of reaching a nuclear agreement with Tehran, which helped ease fears over supply disruptions.
Brent crude futures fell nearly 2 percent to $109.94 per barrel, while US West Texas Intermediate dropped 1.54 percent. The retreat in energy prices came as geopolitical tensions appeared to ease following Trump’s decision to pause the attack, allowing room for diplomatic negotiations after Iran sent a new peace proposal to Washington.
Trump stated on Monday that he halted the strike to provide space for talks that could prevent Iran from developing nuclear weapons. Despite this, investor confidence remained fragile due to recent regional instability, including a weekend drone strike in the United Arab Emirates, which highlighted ongoing risks despite diplomatic overtures.
Fabien Yip, an analyst at IG Markets, noted the market’s cautious stance, emphasizing that investors were awaiting tangible progress, particularly regarding secure shipping through the Strait of Hormuz. He added that until concrete actions occur, markets tend to discount verbal statements from either side.
Global equities experienced mixed trading amid lingering uncertainty. The MSCI Asia-Pacific index outside Japan declined over 1 percent, with Japan’s Nikkei slipping 0.3 percent and South Korea’s Kospi falling more than 3 percent. Chinese blue-chip stocks also saw losses. In the US, futures reversed early gains, with Nasdaq futures down 0.5 percent and S&P 500 futures off 0.3 percent. European futures showed varied movements, reflecting cautious investor sentiment across the continent.
Market focus also shifted to upcoming earnings from chipmaker Nvidia, regarded as a crucial indicator for the ongoing artificial intelligence-driven rally in global equities.
Government bond markets stabilized after earlier selloffs triggered by inflation concerns linked to the Middle East conflict. The benchmark 10-year US Treasury yield eased to 4.6034 percent during Asian trading, retreating from over one-year highs. Japanese government bond yields also declined across maturities. Analysts acknowledged that while worries over prolonged energy-related inflation persist, some immediate pressure has diminished as oil prices fell.
In currency markets, the US dollar remained strong against the Japanese yen at 158.99, with traders vigilant for potential intervention from Tokyo as the yen continues to face downward pressure. The euro and British pound also weakened slightly against the dollar, reflecting a broad safe-haven demand amid geopolitical uncertainty.
Gold prices eased as rising bond yields weighed on non-yielding assets, though markets remained sensitive to any further escalation risks in the region.
