Key facts
- Oil prices and global equities declined amid persistent Middle East tensions and uncertainty over peace prospects.
- US President Donald Trump indicated a response to an alleged Iranian helicopter downing.
- Investors are bracing for consumer inflation data, increasing bets on Federal Reserve rate hikes.
- Technology stocks led the decline in U.S. equities, with investors rotating into defensive sectors.
- The U.S. Energy Information Administration forecasts a decline in global oil demand in 2026.
Oil prices and global equities declined on Tuesday as lingering tensions in the Middle East and uncertainty over peace prospects overshadowed a pause in hostilities between Iran and Israel. Investors also braced for upcoming consumer inflation data, which could influence Federal Reserve interest rate policy.
On Monday, Iran and Israel had raised hopes for de-escalation, but U.S. President Donald Trump stated that Iran shot down a U.S. Apache helicopter and vowed a response. This followed an Israeli attack on a city in southern Lebanon. Iran had previously warned of resuming hostilities if Israel continued attacks on its ally Hezbollah.
The U.S. Energy Information Administration reported that oil stockpiles in major economies are heading toward their lowest levels since at least 2003 and forecast a decline in global oil demand in 2026.
In equity markets, Wall Street experienced choppy trading, with heavyweight technology stocks on the S&P 500 falling significantly. Investors were seen selling recently high-flying tech stocks and rotating into more defensive sectors such as real estate, utilities, and healthcare, partly in anticipation of the SpaceX IPO.
Traders have increased their bets on a Federal Reserve rate hike by December following a stronger-than-expected jobs report. The Dow Jones Industrial Average saw a slight gain, while the S&P 500 and Nasdaq Composite closed lower. MSCI's global stocks gauge managed a small rise, and the pan-European STOXX 600 index finished down.
The dollar pared earlier losses as uncertainty about the ceasefire grew. U.S. Treasury yields dipped as traders awaited inflation data. Gold and silver prices fell amid rising expectations for a U.S. interest rate hike.