Oil Holds Gain on Iran, Gold Trades Below $5,000: Markets Wrap
(Bloomberg) — Crude oil held its gains with traders pricing in heightened geopolitical risk after Iran conducted naval exercises near a critical shipping corridor before talks with the US resume later.
Brent traded slightly below $69 a barrel after adding 1.3% on Monday, while West Texas Intermediate was near $64. President Donald Trump said he will be indirectly involved in the talks, adding Iran wants to make a deal.
Gold dropped 0.9% to trade around $4,950 an ounce and silver fell 2.8%. Asian stocks were little changed in thin holiday trading, with investors looking ahead to a fresh batch of economic data later this week for direction. Mainland China, Hong Kong and some other regional markets are shut for the Lunar New Year, and US markets will return Tuesday after observing the Presidents’ Day holiday on Monday.
The US rate path remains in focus following the slower-than-expected inflation print on Friday as traders fully priced a cut by the Federal Reserve in July and the strong chance of a move in June. Investors are also paying attention to the shifts in sentiment around artificial intelligence, which is reverberating far beyond the tech sector with the emergence of the so-called AI scare trade.
“The backdrop for equities is positive post CPI,” said Andrea Gabellone, head of global equities at KBC Securities. At the same time, there could be “more dispersion ahead as sentiment around key AI-exposed sectors is still very critical,” he added.
Developments in the Middle East pushed geopolitical risk back into focus for investors.
Iranian Foreign Minister Abbas Araghchi held talks with the head of the UN’s atomic watchdog in Geneva on Monday, ahead of a second round of nuclear negotiations with the US.
Trump has threatened to strike the Islamic Republic unless it agrees to a deal curbing Tehran’s nuclear program in exchange for sanctions relief. He’s mobilized warships and fighter jets near Iran in response to a recent deadly crackdown by the regime there following mass protests.
Investors seeking clues on the Fed’s rate path will get a chance Tuesday, when Governor Michael Barr speaks on the labor market and AI, while San Francisco Fed President Mary Daly discusses AI and the economy. Traders will also be watching for ADP private payrolls numbers on Tuesday and the minutes from the Fed’s January meeting on Wednesday for a fresh read on the economy.
Cash trading in Treasuries resumed Tuesday after bonds had rallied on Friday in reaction to the benign US inflation data.
Treasury two-year yields were little changed after closing at the lowest level since 2022 on Friday. That came as traders priced in higher chances the Fed will slash rates more than twice this year. Yields on the benchmark 10-year stood at 4.04%.
Meanwhile, the impact of AI, which has driven selling pressure across multiple stock-market sectors in recent weeks, continued to draw attention.
A JPMorgan Chase & Co. team led by Mislav Matejka urged caution on stocks at risk of AI-driven “cannibalization” including software, business services and media companies.
Firms are developing tools to capitalize on the divergence. Goldman Sachs Group Inc. launched a new basket of software stocks that goes long firms that will benefit from AI adoption, while shorting the companies whose workflows could be replaced.
With AI disruption rippling through markets, a lot will come down to earnings resilience, in particular in the US.
“When you look at the current earnings season, the companies are showing 13% of growth,” Nataliia Lipikhina, head of EMEA equity strategy at JPMorgan, told Bloomberg TV. “Overall, this is the reason why we continue to be positive on the S&P.”
Corporate Highlights:
BHP Group’s shares soared after the company said earnings for the six months to the end of December rose by more than a fifth, thanks to a surge in copper prices. Apple Inc. said on Monday it is holding a product launch on March 4, with the company preparing to announce several new devices in the coming weeks. Alibaba Group Holding Ltd. unveiled a major upgrade of its flagship AI model, accelerating a race with a panoply of startups and sectoral leaders aiming to get in ahead of Chinese sensation DeepSeek’s next big platform. Advanced Micro Devices Inc. is partnering with Tata Consultancy Services Ltd. to deploy the US chipmaker’s latest AI data center technology in India, challenging Nvidia Corp. in one of the world’s fastest-growing markets. Hyatt Hotels Corp. Executive Chairman Tom Pritzker said he’s retiring from his position at the company and won’t stand for reelection to its board, citing an association with the late disgraced financier Jeffrey Epstein. Some of the main moves in markets:
Stocks
S&P 500 futures were unchanged as of 10:44 a.m. Tokyo time Japan’s Topix fell 0.4% Australia’s S&P/ASX 200 rose 0.6% Euro Stoxx 50 futures were little changed Currencies
The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1843 The Japanese yen was little changed at 153.35 per dollar The offshore yuan was little changed at 6.8854 per dollar Cryptocurrencies
Bitcoin was little changed at $68,832.02 Ether rose 0.2% to $2,001.82 Bonds
The yield on 10-year Treasuries was little changed at 4.04% Japan’s 10-year yield declined 1.5 basis points to 2.195% Australia’s 10-year yield declined one basis point to 4.70% Commodities
West Texas Intermediate crude rose 1.2% to $63.64 a barrel Spot gold fell 0.6% to $4,963.29 an ounce This story was produced with the assistance of Bloomberg Automation.
–With assistance from Richard Henderson.
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