Stocks climb as oil prices retreat under $100 per barrel
Stock markets firmed Tuesday as oil prices retreated on easing supply worries, helping to temper concerns about rising government borrowing costs.
On Wall Street, the technology-focused Nasdaq index advanced 0.8 percent, coming off a record high set on Monday driven by AI enthusiasm.
That boosted European stock markets after gains across most Asian equity markets.
Oil prices were down more than one percent as Gulf exports inch back towards pre-war levels, with the international benchmark Brent North Sea crude falling below the psychological level of $100 a barrel.
Oil's decline "gave a boost to interest-rate sensitive stocks including real estate and consumer cyclicals," said Dan Coatsworth, head of markets at AJ Bell.
Arne Lohmann Rasmussen, a commodities analyst with Global Risk Management, noted that "Gulf exports excluding Iran averaged 19.2 mb/d in September, equivalent to 81 percent of pre-war levels" even though Iran is still curtailing tanker traffic through the Strait of Hormuz.
But he added that "Crude exports were back to 91 percent of pre-war levels, while refined product exports were only around 60 percent" -- a supply cut that has sent fuel costs soaring.
In the UK, the average diesel price at the pump struck a record high last week, according to official data.
There remains plenty of uncertainty among traders over the Middle East crisis, which is putting pressure on central banks to raise interest rates to combat energy-fueled inflation.
That has pushed government bond yields up to levels not seen in decades, heightening worries about ballooning debt.
Analysts say the race to build out AI data centres, servers and chips has compounded that problem, with tech titans no longer able to rely on their vast piles of cash.
Borrowing by firms including Google, Amazon and Microsoft hit around $500 billion in the nine months since January, and Goldman Sachs expects a further ramp-up in 2027, to $1.2 trillion.
"This is not something that we've seen before," said Chris Della Fave, senior vice president at the fundraising advisory firm Post Oak Group, who estimates that AI accounts for 25 percent of all corporate bond issuance -- up from four percent two years ago.
David Morrison, senior market analyst at Trade Nation, pointed to the fact that only the technology and energy sectors are trading higher than their 50-day moving average.
"Clearly, this is not indicative of a healthy bull market and there is a very real danger that a crack in the AI story could see stocks across the tech sector hit an air pocket which affects everything," he said.
Noting the upward push in equities, David Morrison, senior market analyst at Trade Nation, said "there was a solid start to the new week yesterday as all the major US stock indices ended the session with gains," even though elevated bond yields "remain a concern".
In company news, UK online fashion giant Asos saw its share price slump more than nine percent in London trading Tuesday after customers reportedly received a mobile notification claiming its systems had been hacked.
- Key figures at around 1530 GMT -
New York - Dow: UP 0.7 percent at 51,640.63 points
New York - S&P 500: UP 0.9 percent at 7,840.48
New York - Nasdaq: UP 0.8 percent at 27,705.81
London - FTSE 100: UP 0.4 percent at 10,541.69 (close)
Paris - CAC 40: UP 0.5 percent at 7,868.71 (close)
Frankfurt - DAX: UP 0.8 percent at 25,449.19 (close)
Tokyo - Nikkei 225: UP 1.1 percent at 70,683.98 (close)
Hong Kong - Hang Seng Index: UP 1.0 percent at 24,280.56 (close)
Shanghai - Composite: Closed for a holiday
Euro/dollar: UP at $1.1267 from $1.1217 on Monday
Pound/dollar: UP at $1.3282 from $1.3221
Dollar/yen: UP at 158.09 yen from 157.99 yen
Euro/pound: DOWN at 84.83 pence from 84.84 pence
Brent North Sea Crude: DOWN 1.8 percent at $98.50 per barrel
West Texas Intermediate: DOWN 1.4 percent at $88.19 per barrel
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S.Carlevaro--IM
