Oil fell 8% on Monday on hopes for US-Iran peace talks, pulling bond yields lower worldwide. US tech stocks slid anyway, as worries over AI spending persisted and investors turned to Tuesday's midterm elections.
Oil prices tumbled on Monday on hopes that US-Iran peace talks could soon take place. The drop pushed bond yields around the world lower. Stock markets in Asia and Europe mostly benefited, but the momentum evaporated in US hours.
Brent posted its biggest fall since April, and WTI its biggest since July, with oil down 8%. UK gilt yields fell 10 basis points, and US yields dropped 4 basis points at the long end.
Tech drags US indexes lower
The Nasdaq lost 1% and the S&P 500 fell 0.5%, while the Dow gained 0.4%. Tech shares dropped 2.7% on the S&P 500, and Marvell and Lumentum fell 13% and 19% respectively after a deal.
The AI trade has faltered recently, mainly because of growing worries that companies are borrowing too much to fund a capex binge that might be too big. Reuters columnist Jamie McGeever wrote that an AI-driven stock market rout could produce negative wealth effects and lower AI capex, which could stir recession fears across the developed world.
Election and central banks come next
Oil's drop came as hope spread that Iran may be more open to negotiations with the US. Trump said a deal "could happen" on Monday, though he has previously signaled new attacks on Iran could follow the midterms.
Central bank decisions follow this week. The Reserve Bank of Australia is expected to deliver a rate hike to 4.85% on Tuesday, which would be its fifth this year. Decisions from Sweden, Poland, Brazil, Norway, the UK and Mexico follow.
Source: Reuters via Investing.com
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