Global markets displayed cautious stability on Tuesday, with stock indices largely unchanged and oil prices rising as investors assessed the ongoing situation in the Iran conflict.

Iran Conflict Stalls, Oil Prices Climb

The United States is currently reviewing Iran’s latest proposal for resolving the conflict. However, former President Trump reportedly expressed dissatisfaction, deeming the plan insufficient in addressing Iran’s nuclear program. This impasse leaves the two-month-long conflict at a critical point, disrupting vital energy routes through the Strait of Hormuz.

Consequently, oil prices surpassed US$110 per barrel on Tuesday, reflecting heightened uncertainty and potential supply constraints. Brent crude oil jumped 2.7 percent to US$111.20 – a three-week high, while U.S. oil prices climbed 2.9 percent to US$99.10. This trend has continued in recent days due to diminishing hopes for a quick resolution.

Market Reaction & Key Earnings

The U.S. S&P 500 experienced a slight dip of 0.1 percent in futures trading, while tech-focused Nasdaq futures declined 0.4 percent. The recent AI-driven rally has provided some resilience to equity markets, but prolonged oil supply issues pose a risk to economic growth.

Investors are now focused on earnings reports from major technology companies – Microsoft, Alphabet, Amazon, Meta Platforms, and Apple – to determine if the AI rally can be sustained.

Bank of Japan & Currency Movements

The dollar index increased by 0.2 percent, with the pound and euro seeing similar declines. The dollar has acted as a safe-haven asset during the Iran conflict, but has partially given up gains made in March.

BOJ Policy Shift

The Bank of Japan maintained short-term interest rates at 0.75 percent, but a 6-3 split vote and more assertive language suggest the threshold for another rate hike may be decreasing. The yen initially strengthened but settled slightly lower at 159.53 per dollar, nearing the 160 level, raising concerns about potential Tokyo intervention.

Central Bank Week Ahead

The U.S. Federal Reserve, the Bank of England, and the European Central Bank are all scheduled to announce policy decisions this week, following the BOJ. While rates are expected to remain steady, market attention will be on commentary regarding inflation and potential responses.