Oil Rises, Stocks Mixed Amid Mideast Tensions

Oil Rises, Stocks Mixed Amid Mideast Tensions

Oil prices increased and global stock markets exhibited mixed performance on Tuesday, May 26, as optimism surrounding a potential U.S.-Iran peace deal was counterbalanced by new U.S. military strikes in the Middle East. Brent crude futures rose over 1% to $97.32 a barrel in early Asian trading, while U.S. West Texas Intermediate crude showed a slight increase from Monday's close.

Iranian officials, including the top negotiator and foreign minister, were in Doha for discussions with Qatar's prime minister regarding a potential agreement with the U.S. to end hostilities. Reports indicated that a plan to open the Strait of Hormuz approximately 30 days after a deal was being considered. However, U.S. forces conducted defensive strikes in southern Iran on Monday, targeting boats attempting to lay mines and missile launch sites, which tempered market sentiment.

Stock markets reflected this uncertainty. MSCI's broadest index of Asia-Pacific shares outside Japan advanced 0.8%, while Japan's Nikkei shed 0.2%. U.S. Nasdaq futures trimmed earlier gains to trade 0.9% higher, and S&P 500 futures rose 0.68%. European futures were mixed, with EUROSTOXX 50 futures easing 0.36% and FTSE futures adding 0.4%. The dollar steadied due to renewed safe-haven demand, and bond yields remained largely stable after a previous week's rout driven by inflation and interest rate hike concerns.