Oil Falls 0.57% to $115.15 as U.S. Stocks Rise and Investors Await Tech Earnings
Key Facts
U.S. stocks rose in Monday’s session on October 26, while oil prices continued to decline in early Tuesday trading, as investors monitored diplomatic efforts in the Middle East and a busy week of corporate earnings and central bank meetings. The S&P 500 rose 0.7%, the Dow Jones added 0.3% and the Nasdaq Composite gained 0.8%, according to data reported by the Associated Press. At 00:00 GMT on Tuesday, Brent futures fell 0.57% to $115.15 a barrel, while U.S. crude dropped 0.43% to $101.32, according to Reuters. The moves followed a decline in oil prices at the previous session’s close, though they remained at elevated levels. Markets are also awaiting results from major technology companies and the Federal Reserve’s decision this week.
Brent futures ended Monday’s session down 0.78% at $115.81 a barrel, while U.S. crude closed 1.46% lower at $101.76, according to Reuters. More broadly, the MSCI World Index rose 0.38% to 1,123.19 points, while the emerging markets stock index fell 0.96% to 1,562.91 points. The moves show divergence across global markets in the same session, with the global index rising and emerging-market stocks falling. Early Asian trading also appeared cautious: Japan’s Nikkei fell 0.5% after losing 4.0% the previous week, and South Korea’s main index declined 1.1%. The moves followed a strong week for oil, keeping supply concerns in the background of trading.
Brent rose 6.2% in the week ended October 23, marking its highest weekly close since mid-2022, as supply concerns intensified following Houthi attacks in Saudi Arabia, according to Reuters. The Houthis said on Monday that they had targeted oil pumping stations on Saudi Arabia’s East-West pipeline and Riyadh airport, while there was no immediate confirmation from Riyadh. On a parallel diplomatic track, Saudi Arabia said the visit by delegations to Tehran aimed to open channels for negotiations to prevent a return to military escalation. Iranian media reported that National Security Council head Mohsen Rezaei met Supreme Leader Mojtaba Khamenei the day after talks in Tehran, and that Khamenei stressed Iran’s commitment to its conditions for ending the war. Reuters recorded a decline in crude prices alongside these developments, but its report did not attribute the move to a single cause.
Investors are also focused on technology companies’ earnings, with about one in three S&P 500-listed companies scheduled to report quarterly results during the week. Alphabet and Microsoft are due to report on Wednesday, followed by Amazon on Thursday, according to the Associated Press. The announcements are significant as investors assess whether spending on artificial intelligence is translating into profits and productivity in line with what investment proponents promised. This comes during a week when corporate results overlap with monetary policy decisions and U.S. economic data. The upcoming figures will therefore be read in the broader context of more than the technology sector’s performance alone.
The Federal Reserve was widely expected to leave interest rates unchanged at the conclusion of its meeting on Wednesday, while markets were pricing in an 80% probability of a rate increase in December, according to Reuters. The week’s agenda also included meetings of the Bank of Japan and the European Central Bank. Markets are awaiting the September U.S. core inflation reading, which is expected to show price pressures holding at 3.1%, while the economy was expected to grow at an annual rate of 3.2%. Goldman Sachs analysts said, "The main risk is that oil futures remain above our forecasts, largely because of concerns about the possibility of further conflict with Iran." The agency added that a longer and more severe energy shock could widen inflation pressures, as attention turns to this week’s data and central bank decisions to determine the path of interest rate and market expectations.