Oil prices are in their longest losing streak of the year, reaching near pre-conflict levels and erasing most of the gains from the recent war. Brent crude is down over 5% to below $80 per barrel, while US WTI has dropped to $75 per barrel. This decline is attributed to reduced geopolitical tensions, with the United States reportedly lifting its naval blockade and allowing Iran to return to the oil market to ease tensions before further negotiations. Morgan Stanley and Goldman Sachs have significantly lowered their oil price forecasts for the coming quarters.
Financial markets are anticipating the Federal Reserve's meeting, which will be the first chaired by the new leader, Kevin Warsh. While interest rates are expected to remain unchanged, the focus will be on Warsh's press conference and his stance on inflation, especially given the prospect of a rapid decline in prices once the Strait of Hormuz is fully reopened. The reopening of Hormuz is recognized as a key factor influencing oil prices, inflation expectations, and central bank policy.
Asian stock markets showed cautious gains on Tuesday after an initial rally driven by news of a US-Iran peace deal. The Nikkei 225 jumped 0.6%, briefly exceeding 70,000, after the Bank of Japan raised its benchmark interest rate by 25 basis points to 1%, a level last seen in 1995. In contrast, the Reserve Bank of Australia opted to hold interest rates steady. US stock indices, including the S&P 500 and Nasdaq futures, are experiencing corrections after a three-day rally, with the US500 losing 0.2% and the US100 dropping over 1%. The yen, while initially volatile, is nearing 160.5 against the dollar, a level that previously triggered currency interventions. The US dollar index remains stable around 99.75. Gold moved 0.4% higher to US$4,324.32.
