Oil Dives as Trump Delays Power Plant Strikes

Brent crude bounced back above $100 early on Tuesday after Monday’s sharp drop from north of $114 to around $86, as Iran denied talks with Washington and supply fears returned. The FTSE 100 closed slightly lower on Monday after recovering from a much deeper intraday fall, while BP and Shell both ended weaker as oil retreated. In the US, the S&P 500, Dow and Nasdaq all closed firmly higher on Monday, helped by the earlier slide in crude, while the dollar first weakened.

Equities

The FTSE 100 fell 0.2% by the close on Monday after recovering from much steeper losses earlier in the session. At its low point, the index had been down as much as 2.4%, leaving it close to a three-month low before sentiment improved later in the day after Donald Trump paused planned strikes on Iranian power plants.

The FTSE 250 also closed 0.2% lower on Monday. In the UK rates market, 10-year gilt yields briefly rose to 5.118%, the highest since July 2008, before easing back towards 5.00% as traders cut back expectations for further Bank of England rate rises.

BP closed 2.2% lower on Monday, while Shell fell 4.2%, as the drop in crude prices weighed on the oil majors. That reversal came after Trump’s comments reduced immediate fears of a further escalation in the Middle East, which had previously supported energy shares.

Goodwin suffered, with the shares almost halving in value on Monday. The engineering group said it was considering cutting dividend payouts because the conflict involving Iran had led to order delays in the Middle East, a clear business update that investors reacted to immediately.

Entain closed 8.2% higher on Monday, making it one of the strongest risers in the FTSE 100. The move followed a Wall Street Journal report that US lawmakers were preparing a bipartisan bill to ban sports bets on prediction markets.

In the US, the S&P 500 closed 1.15% higher on Monday, while the Dow Jones Industrial Average rose 1.38% and the Nasdaq Composite also gained 1.38%. The Russell 2000 outperformed the larger indices, ending Monday up 2.3%.

Airline shares posted solid gains by the close on Monday. Alaska Air and United Airlines both rose more than 4%, while American Airlines added 3.66%, helped by lower oil prices. Cruise operators also moved sharply higher late on Monday. Norwegian Cruise Line jumped more than 6%, while Carnival and Viking Holdings both climbed more than 5%.

JPMorgan Chase closed 1.2% higher on Monday and Goldman Sachs rose 2.2% as bank shares recovered ground.

Forex & Commodities

The US dollar moved lower late on Monday after Donald Trump said planned strikes on Iran’s energy infrastructure would be delayed, which helped ease some immediate concern in currency and commodity markets. By the afternoon in New York, the euro was higher against the dollar at $1.162, while sterling also strengthened, rising to $1.344 and reaching its highest level since 10 March.

The yen also gained ground against the dollar on Monday, with the US currency falling to ¥158.3 after having traded closer to the ¥160 level earlier. The dollar index was lower at 99.08 by late on Monday, showing broader weakness against a basket of major currencies.

Early on Tuesday, the tone shifted slightly in energy markets after Iran denied having talks with Washington. Brent crude rose to $102.8 and US WTI climbed to $90.62, recovering part of Monday’s sharp sell-off, when Brent had settled at $99.94 and WTI at $88.13 after both contracts fell heavily during the session.

Spot gold was lower again early on Tuesday, falling to $4341 per ounce and extending its losing run to a tenth straight session. In the previous session, bullion had dropped as low as $4098 before trimming part of that fall, with the stronger dollar on Tuesday adding further pressure. Silver fell to $66.80 early on Tuesday, while platinum slipped to $1842 and palladium dropped to $1395.