Global equities saw a positive turn on Tuesday, with MSCI's global gauge rising, as declining oil prices and anticipation of Nvidia's financial results influenced investor sentiment. The fall in oil prices, specifically Brent crude dropping 3.6% to $87.27 and West Texas Intermediate (WTI) falling 4.6% to $81.08, was attributed to the US imposing new economic sanctions on Iran, which traders viewed as less disruptive to oil supplies than military escalation. This reduction in oil prices helped to alleviate concerns about high inflation that had driven up Treasury yields throughout the summer.
Bond markets responded positively to the easing inflation worries, with the yield on 10-year US Treasury notes declining seven basis points to 4.63% and 30-year bond yields falling 6.9 basis points to 5.162%. This decline was partly influenced by the US Treasury Department's recent announcement to increase its repurchases of longer-term Treasury notes. The financial markets are also looking ahead to Federal Reserve Chair Kevin Warsh's speech on Friday and Wednesday's release of the Fed's preferred inflation gauge.
On Wall Street, major indexes showed gains with the S&P 500 rising 0.3%, the Dow Jones Industrial Average adding 160 points (0.3%), and the Nasdaq composite climbing 0.7%. Much of this boost was driven by the technology sector, particularly ahead of Nvidia's second-quarter earnings release, where analysts expect the company's revenue to have nearly doubled to $92 billion. Investors are keenly awaiting Nvidia's results for insights into the sustained demand for AI and its impact on the broader tech market.
Asian markets also saw gains, with MSCI's broadest index of Asia-Pacific shares outside Japan closing up 0.56% and Japan's Nikkei rising 0.50% to 65,856.43. European stocks, represented by the pan-European STOXX 600 index, closed up 0.35%. The overall market sentiment was buoyed by the dip in oil prices and the perceived shift from potential military conflict to economic measures against Iran, reducing immediate supply-side risks to energy markets.
