Brent Falls 3.9% to $109.01 as U.S. Futures Rise on Mediation Hopes

Key Facts

U.S. stock futures advanced in Monday, November 2 trading after stocks suffered their steepest decline since June in the previous session, according to the Associated Press. Brent crude, meanwhile, fell 3.9% to $109.01 a barrel, while U.S. crude declined 4.1% to $99.82. Oil fell as hopes revived for diplomatic progress between the United States and Iran. But the Strait of Hormuz remained central to concerns about oil supplies. Markets therefore remained tied to developments in mediation, as investors also monitored the technology earnings season.

U.S. futures rebounded after Friday, October 30, when the S&P 500 fell 1.8%, the Nasdaq Composite dropped 2.9% and the Dow Jones Industrial Average declined 1.1%. The Associated Press attributed part of the selloff to investors abandoning artificial intelligence-linked and other technology stocks. Investors have become “clearly more concerned about a limited number of companies with weaker balance sheets or larger financial commitments,” rather than the technology sector as a whole, said Sunil Tirumalai of UBS Global Research. Markets are watching Apple’s results, due Monday, for signs of demand in the technology sector. Alphabet and Amazon earnings reports the previous week had raised questions in the market about spending on artificial intelligence.

Despite Monday’s decline, Brent rose 13.6% in October, according to a Reuters report published via MarketScreener. Its price remained well above about $72 a barrel in late February, before the war, the Associated Press reported. Oil tankers continued to face attacks in the Gulf, keeping supply risks in place even as prices fell, the report said. Mediation efforts between Washington and Tehran bolstered hopes for diplomatic progress, the Associated Press said, but developments in the Strait of Hormuz continued to shape the market’s assessment of risk. Iran’s foreign minister said Iranian negotiators in Qatar were discussing a proposal that could reopen the strait within two days if the United States met several conditions, adding that there were no direct talks with Washington.

In Asia, Japan’s Nikkei fell 0.3% to 63,081.86 points, while South Korea’s Kospi rose 2.2% to 5,859.08 points in Monday trading. The divergence followed declines in both indexes over the previous month: the Nikkei lost more than 7%, while the Kospi fell more than 16%, according to the Associated Press. China said over the weekend that factory activity had returned to contraction in October. The People’s Bank of China said Monday it would inject about 100 billion yuan through a new swap facility to provide liquidity to financial firms that can invest it in the market. Investors in the U.S. market were also focused on the midterm elections scheduled for Tuesday, November 3, amid growing voter concern about artificial intelligence, data centers and inflation.

Markets moved ahead of upcoming U.S. data that investors are monitoring. The Labor Department is scheduled to release October employment figures on Friday, November 6, while a FactSet survey forecast 55,000 jobs added. The U.S. Energy Information Administration also postponed its weekly petroleum status report to Thursday, November 12, because of the Veterans Day holiday. The report is usually released Wednesday at 10:30 a.m. Eastern time, with announced holiday exceptions. The Federal Reserve is scheduled to publish on November 18 the minutes of the Federal Open Market Committee meeting held on October 27 and 28. The central bank’s statement after the meeting indicated that Beth Hammack opposed the decision to hold the interest-rate range steady, favoring a quarter-percentage-point increase.

Apple’s results, due Monday, come as investors assess technology companies’ performance after last week’s reports. Analysts forecast quarterly earnings of $2 a share and revenue of $113 billion, compared with earnings of $1.85 a share in the same period a year earlier, according to a Reuters report via MarketScreener. The U.S. election on Tuesday will be another event on markets’ watch list this week. The October employment report follows on Friday, November 6, ahead of the release of Federal Reserve meeting minutes on November 18. The postponed weekly oil report is officially scheduled for Thursday, November 12.