Global equities flat as Iran deal hopes clash with hawkish Fed outlook
Wall Street closes mixed with the Dow rising and tech indices falling, as markets digest progress in US-Iran nuclear talks and a shift in Federal Reserve policy under new Chair Kevin Warsh.
Global equities remained largely unchanged on Monday as optimism surrounding US-Iran nuclear negotiations was counterbalanced by a hawkish shift in US monetary policy. Brent crude futures settled lower by 3.38 per cent to US$77.90 a barrel, driven by the prospect of eased sanctions and improved transit through the Strait of Hormuz.
US Vice President JD Vance announced in Switzerland that Iran has agreed to permit nuclear inspectors into the country, with inspections potentially commencing that week. Concurrently, the US Treasury Department authorised Iranian sales of crude oil and petroleum products through August 21, marking a significant easing of decades-old sanctions in exchange for nuclear commitments.
Despite the geopolitical developments, Wall Street posted mixed results. The Dow Jones Industrial Average rose 0.29 per cent, while the S&P 500 fell 0.37 per cent and the Nasdaq Composite dropped 1.32 per cent, dragged down by communication services and consumer discretionary stocks. Europe’s STOXX 600 index gained 0.58 per cent, but the global MSCI gauge slipped 0.03 per cent.
Market sentiment was heavily influenced by the Federal Reserve’s latest stance and reduced expectations for rate cuts under new Chair Kevin Warsh. The yield on benchmark US 10-year Treasury notes rose 5.78 basis points to 4.509 per cent. Gerry Sparrow, chief investment officer at Sparrow Capital Management, noted that investors were surprised by the new chair’s approach, which diverged from expectations of a more accommodative policy.
In currency markets, the pound rose 0.11 per cent to US$1.3244 following UK Prime Minister Keir Starmer’s announcement of his resignation. The euro eased 0.36 per cent to US$1.1427, while the dollar strengthened against the yen, rising 0.19 per cent to 161.58 yen. Spot gold prices increased 0.72 per cent to US$4,190.17 an ounce.
