Oil slides, stocks rise as Iran-Israel ceasefire holds
NEW YORK: Oil prices sank for a second straight day and stock markets mostly rose Tuesday as a ceasefire between Iran and Israel appeared to be holding firm.
Crude futures slumped in volatile trading after US President Donald Trump announced a ceasefire, extending Monday's steep losses in oil after Iran's response to the US attack did not hit energy infrastructure.
"This morning's ceasefire further reduced the perceived threat to Middle Eastern oil supply routes," said David Morrison, analyst at Trade Nation.
The main international and US oil contracts briefly bounced off their lows as Israel and Iran accused each other of breaking the ceasefire, but then resumed their fall after Trump berated the two countries in an expletive-laced outburst.
Prices were also brought down by Trump saying that China could continue to buy oil from Iran, in what appeared to be relief from sanctions Washington had previously imposed.
Brent futures finished the day at US$67.14 down nearly seven per cent after dropping by a similar per cent on Monday.
Wall Street stocks spent the entire session in positive territory following the improved dynamics in the Middle East.
With the "de-escalation, the market seems to be doing better," Art Hogan, chief market strategist of B. Riley Wealth, said of the Iran-Israel dynamics.
Energy was the only one of 11 S&P 500 sectors to fall sharply, with nine sectors firmly higher.
Paris and Frankfurt ended the day with solid gains, but London closed flat as shares in oil majors Shell and BP fell along with crude prices.
Asian markets closed higher.
The dollar accelerated losses after remarks by US Federal Reserve chair Jerome Powell failed to dampen market expectations for interest rate cuts during his first of two days of congressional testimony.
"Powell was a little more neutral to slightly more dovish than markets had anticipated, no doubt helped by the collapse in oil prices," said Fawad Razaqzada, analyst at City Index and Forex.com.
"The US dollar could be heading further lower unless a fresh flare-up in the Middle East conflict sends oil prices spiking again," he added.
Trump has been outspoken in ridiculing Powell's decisions thus far, referring to the Fed chair in a social media post Tuesday as a "dumb, hardheaded person."
Powell's appearance came after two Fed officials -- Christopher Waller and Michelle Bowman -- recently suggested policymakers could cut rates as early as July.
Powell declined to comment when asked about Waller's views on a pathway to rate reductions.
But he said officials could be inclined to lower rates sooner if inflation were weaker than expected or if the labor market deteriorated.
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