US and European equities rose despite fresh oil supply disruptions, as strong corporate outlooks from Nvidia and airlines offset energy market fears
NEW YORK: US and European equities rose on Tuesday despite another surge in oil prices. Fresh Iranian attacks on crude-producing neighbours added to an already disrupted petroleum supply picture.
Market gains in US indices moderated after an early rally. This was prompted by upbeat outlooks from artificial intelligence leader Nvidia and major US airlines.
The S&P 500 finished up 0.3% as markets await a US Federal Reserve decision. Delta Air Lines led the major American carriers with a 6.6% gain.
“The market is showing some resilience despite renewed strength in oil prices,” said Briefing.com. “Participants appear reluctant to press bets too aggressively ahead of tomorrow’s (Fed) decision.”
Oil prices powered higher, with international benchmark Brent jumping 3.2% to USD 103.42 a barrel. A new drone strike on Tuesday hit the Fujairah oil complex in the UAE.
Two drones also targeted a major southern Iraqi oil field. The attacks reflect fears that Middle Eastern supplies could face further curtailments.
The effective closure of the Strait of Hormuz threatens about one-fifth of daily global supply. Rystad Energy estimated just 12.5 million barrels per day of Middle Eastern oil remains online.
“But the 12.5 million bpd figure is not secure,” Rystad said. “If the (Hormuz) situation persists, the drop in departures could start feeding through into additional export losses.”
Earlier in Asia, Hong Kong, Seoul and Taipei closed higher. Tokyo and Shanghai dipped as investors await a slew of central bank decisions this week.
The Federal Reserve “is in a bind,” said eToro US investment analyst Bret Kenwell. “Slower growth and a softer labor market would normally argue for easing monetary policy.”
He added that inflation remains sticky while surging oil prices add another layer of uncertainty. Australia’s central bank hiked its key interest rate, pointing to “sharply higher fuel prices.”
