Oil rises, stocks slip as US-Iran peace talk hopes dim
Oil prices rose and stock markets mostly retreated on Monday as peace talks between the United States and Iran stalled, ahead of a week full of central bank decisions and corporate earnings.
Iranian Foreign Minister Abbas Araghchi's visit to Islamabad had fanned hopes for fresh negotiations with Washington at the weekend until US President Donald Trump scrapped a planned trip by envoys on Saturday.
After calling off his emissaries' trip, Trump told Fox News that, if Iran wanted talks, "they can come to us, or they can call us."
Both main international oil contracts were up around three percent, with Brent crude rising to near $109 a barrel as the crucial Strait of Hormuz waterway remained largely closed, though lingering hopes that a deal could eventually be reached tempered gains.
Equity investors were cautious, with Wall Street's main indices down in late morning trading.
Europe's main markets also ended the day lower, while Asian stocks were mixed.
"It may be that hopes of a diplomatic breakthrough were pretty faint to start with, and markets are now in wait-and-see territory ahead of a heavy week of earnings and economic touchpoints," said Derren Nathan, head of equity research at Hargreaves Lansdown.
With energy prices remaining high, the US Federal Reserve is expected to keep interest rates unchanged on Wednesday, followed by similar decisions from the European Central Bank and Bank of England.
"There's no expectations of rate cuts from any of these central banks," said Trade Nation analyst David Morrison.
"But analysts will be paying very close attention to comments made, particularly those to do with inflation," he added.
Investors were also looking ahead to earnings this week from US tech titans Alphabet, Meta, Microsoft, Amazon and Apple.
"Investors have been encouraged by corporate news flow over the past few weeks, leading to higher equity prices," said Russ Mould, investment director at AJ Bell.
He added, however, that "higher oil for longer spells trouble for inflation, which in turn could act as a headwind for the economy".
Trade Nation's Morrison noted that companies which have reported first-quarter results are showing on average 15.1 percent growth in profits and the market is heading for a sixth successive quarter of double-digit profit growth.
"This is shaping up to be a blow-out season and this is what investors are responding to," he said.
"The US-Iran war is viewed as a distraction which will end at some point."
Tehran's top diplomat blamed Washington on Monday for the failure of talks in Pakistan this month -- the first and only round of negotiations in a bid to strike a deal to end the conflict.
Araghchi blamed the United States for its "excessive demands", adding that "safe passage through the Strait of Hormuz is an important global issue".
Citing a US official and two other sources with knowledge of the matter, US media outlet Axios reported on Sunday that Iran had sent a new proposal to end the war centred on reopening the Strait of Hormuz and ending a US naval blockade there, with nuclear negotiations postponed for a later stage.
- Key figures at 1530 GMT -
West Texas Intermediate: UP 2.9 percent at $97.11 a barrel
Brent North Sea Crude: UP 3.4 percent at $108.88 a barrel
New York - Dow: DOWN 0.3 percent at 49,077.50 points
New York - S&P 500: DOWN 0.2 percent at 7,153.75
New York - Nasdaq Composite: DOWN 0.3 percent at 24,756.38
London - FTSE 100: DOWN 0.6 percent at 10,321.09 (close)
Paris - CAC 40: DOWN 0.2 percent at 8,141.92 (close)
Frankfurt - DAX: DOWN 0.2 percent at 24,083.53 (close)
Tokyo - Nikkei 225: UP 1.4 percent at 60,537.36 (close)
Hong Kong - Hang Seng Index: DOWN 0.2 percent at 25,925.65 (close)
Shanghai - Composite: UP 0.2 percent at 4,086.34 (close)
Euro/dollar: UP at $1.1736 from $1.1717 on Friday
Pound/dollar: UP at $1.3551 from $1.3530
Dollar/yen: DOWN at 159.25 yen from 159.42 yen
Euro/pound: DOWN at 86.59 pence from 86.60 pence
burs-rl/sbk
(G.Mokoena--TPT)
