Brent crude fell nearly 3% to $85.95 a barrel on Wednesday, its third straight daily drop, after Iran and Oman said they discussed a temporary navigational corridor through the Strait of Hormuz. The prospect of the chokepoint reopening also pulled bond yields lower and lifted world stocks, while traders awaited a Nvidia earnings report and fresh U.S. inflation data.
Oil falls on Hormuz corridor talks
Brent crude futures slid nearly 3% to $85.95 per barrel on Wednesday, extending losses for a third straight session. According to Reuters: "a joint temporary navigational corridor" is what Iran and Oman said they had discussed through the Strait of Hormuz, agreeing to clear it of mines and reviving hopes for a breakthrough in the nearly six-month conflict that has roiled oil markets. The strait handled a fifth of the world's traded oil before the war.
The prospect of more oil supply moving through the strait pushed short-term bond yields lower. The yield on 2-year German bonds dropped to a more than one-week low of 2.771%. Its U.S. counterpart held steady at 4.195% after falling about four basis points on Tuesday. MSCI's world stocks index edged up 0.1%, with Europe's STOXX 600 benchmark at its highest in over a week.
Inflation data and rate-hike odds in focus
Markets now await the U.S. Personal Consumption Expenditures Price Index, due later Wednesday, for signals on the Federal Reserve's policy path. Odds for an interest rate hike of at least 25 basis points in September have dropped to 36% from around 67% earlier this month after recent data suggested inflation pressures were moderating, according to the CME Group's FedWatch Tool. However, rates are still expected to rise by year-end.
Nvidia earnings and gold near highs
Nvidia is set to report second-quarter earnings after U.S. markets close, with investors watching whether the AI spending boom can turn profits that satisfy the market. The chipmaker's shares were up 0.3% in pre-market trading, and the stock has gained 14% this year, on track for its smallest annual gain in four years.
Elsewhere, spot gold last fetched $4,618.95 per ounce, just shy of the three-month high touched in the previous session. Bitcoin traded higher at $78,631.59.
Source: Reuters
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