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Oil prices fall as worries about rates offset optimism over Iran talks.

As expectations for a rise in interest rates pushed up U.S. Treasury Yields, global stocks were mostly flat Monday. Oil prices fell as optimism about progress?in U.S.Iran talks was offset. U.S. Vice-President JD Vance stated in Switzerland that Iran has agreed to let nuclear inspectors enter the country. The conversations about the inspections could begin as early as this week. Treasury Department of the United States authorized Iranian crude oil, petrochemicals and petroleum products sales through August 21. This eases decades-old sanctions as the United States moves toward a final deal with Iran in exchange for nuclear inspections and a free transit through Strait of Hormuz.

Wall Street's benchmark S&P 500 index and the Nasdaq both finished lower due to a decline in consumer discretionary and communication services stocks. The Dow finished higher.

The Dow Jones Industrial Average fell 0.37%, the S&P 500 dropped 0.37%, and the Nasdaq Composite declined 1.32%.

The STOXX 600 index in Europe rose by 0.58%. MSCI's global stock index fell by 0.03%.

Gerry Sparrow, Chief Investment Officer at Sparrow Capital Management, stated that the markets are driven by the Fed's hawkish view and lower expectations of new Fed Chair Kevin Warsh moving to start cutting rates.

Sparrow stated that the market was surprised by the action of the new Fed Chair, as they had expected him to be more lenient on interest rates. Last Wednesday, the Federal Reserve held interest rates at their current level. However, policymakers are expecting a rise in borrowing costs this year due to growing concerns over inflation that is above the 2% target set by the U.S. Central Bank.

The yield on the benchmark U.S. 10 year notes increased 5.78 basis points to 4.50%.

Brent crude futures settled lower by 3.38% at $77.90 a barrel, a far cry from their peak in May of $126.41.

Sparrow stated that "the progress in peace negotiations is good. But the only negative surprise was the fact that the new Fed didn't seem to be a bit more accommodating during its latest announcement."

UK POUND RISE AFTER STARMER'S RESIGNATION The pound rose after Keir Starmer, the Prime Minister announced his resignation. This paved the way for Britain to elect its seventh leader in ten years.

The pound recovered from earlier losses to be up?0.11%, or $1.3244. Andy Burnham, the former Manchester mayor, is expected to succeed Starmer. However investors believe that a key question for UK bond markets nervous about Brexit will be who will become finance minister.

The euro fell 0.36%, to $1.1427 after reaching a three-month high on Friday of $1.1418. The dollar was up 0.19% to 161,58 yen. Only the threat of Japanese intervention prevented it from reaching its 40-year high in 2024 of 161.96.

The dollar index (which measures the greenback in relation to a basket including the yen, the euro and other currencies) rose by 0.17%. Gold spot rose by 0.72%, to $4190.17 per ounce.

(source: Reuters)