Global equity and bond markets steadied on Tuesday. U.S. President Donald Trump's announcement that he had postponed a planned strike on Iran and expressed optimism about a potential nuclear deal contributed to a decline in oil prices. Trump stated on Monday that he had called off a scheduled retaliatory strike against Iran after Tehran submitted a new peace proposal to Washington, aiming to create time for negotiations on an agreement to end the conflict. He later indicated that it was "highly likely" the United States could reach a deal with Iran to prevent Tehran from acquiring nuclear weapons. Market sentiment remained generally cautious, however, following investor jitters in the previous session triggered by drone attacks in the United Arab Emirates over the weekend. European stocks rose 0.7% in early trading, extending their recovery from Friday's 1.5% plunge, which occurred as bond market fears spilled over into equities. Futures for the U.S. S&P 500 index showed little change. The index ended Monday largely flat after dropping 1.2% on Friday. IG market analyst Fabien Yip commented, "We've seen too many flip-flops already." "Until there is a real, tangible change on the ground in the Strait of Hormuz—with vessels passing safely and a clear recovery in traffic—I don't think markets will pay much overall attention to verbal statements from either side." Brent crude futures fell 1.4% to $110.50 per barrel, while U.S. crude held steady at $108.70 per barrel, influenced by Trump's remarks. Both remain more than 50% above their pre-conflict levels. The MSCI Asia-Pacific ex-Japan index declined over 1%, and Japan's Nikkei index retreated 0.4%. The highly anticipated earnings report from chip giant Nvidia, scheduled for Wednesday, will test the market's reception of one of the world's most prominent AI trades. Expectations are extremely high for the world's most valuable company. Richard Reyle, Chief Investment Officer at Questar Capital Partners, noted, "Nvidia is the market's proxy for AI. This bull market has been largely driven by AI over the past few years." Bond Sell-off Moderates The pullback in oil prices on Tuesday helped moderate the intense sell-off in global bonds, though concerns persist that the Iran conflict could lead to sustained inflationary pressures. The benchmark 10-year U.S. Treasury yield retreated to 4.597% from a more than one-year high above 4.63%. Government bond yields in Japan and Europe, which had also surged sharply last week, moved lower on Tuesday, with UK gilt yields posting the largest decline. (Note: Bond yields move inversely to prices.)
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