Stocks mixed as oil prices rise again after Iran strikes

By Harry Robertson and Gregor Stuart Hunter

LONDON/SINGAPORE, March 17 (Reuters) – European stocks ticked up but U.S. futures dipped on Tuesday as Iran’s renewed attacks on Washington’s Gulf allies drove oil prices higher, keeping investors on edge after a tentative rebound in equities on Monday and in Asian markets overnight.

Meanwhile, the dollar and U.S. Treasury yields were little changed as allies rebuffed President Donald Trump’s demands to send warships to escort oil tankers through the key Strait of Hormuz and investors awaited decisions this week from the world’s major central banks.

The pan-European STOXX 600 index was last up 0.5%, boosted by the utilities and energy sectors, which are benefiting from higher oil prices.

Futures for the U.S. S&P 500 and the Nasdaq both pointed to a 0.1% fall at the open.

“U.S. markets pushed higher overnight, but futures are pointing to a softer start this afternoon, with volatility still very much in the driver’s seat,” said Matt Britzman, senior equity analyst, Hargreaves Lansdown.

Brent crude oil, the global benchmark, was last up 2.9% at $103.20 a barrel after Iran launched fresh attacks on the United Arab Emirates on Tuesday.

Operations at the UAE’s Shah gas field remained suspended on Tuesday, while a new attack caused a fire in the key oil export terminal of Fujairah, highlighting how Tehran is disrupting energy flows from the region.

Stock markets perked up on Monday as oil prices dipped on hopes shipping flows from the Gulf would improve and as optimism about artificial intelligence helped boost U.S. tech companies. The S&P 500 climbed 1%.

Asian shares followed suit overnight, with MSCI’s broadest index of Asia-Pacific shares outside Japan up 1%, and South Korea’s Kospi rising 1.6%.

Following Tuesday’s rebound in oil prices, Brent crude is now up more than 40% since the U.S. and Israeli strikes began, while the S&P 500 is down around 3%.

CENTRAL BANKS GRAPPLE WITH ENERGY PRICES

The Reserve Bank of Australia voted on Tuesday to hike interest rates for a second time this year as it grapples with a renewed bout of inflation, taking its benchmark rate to 4.1%.

It set the tone ahead of the U.S. Federal Reserve on Wednesday and European Central Bank, Bank of England and Bank of Japan meetings on Thursday, which will assess the global economic impact of the Iran war even though all are expected to stand pat on policy. 

Money market traders now broadly expect just one cut from the Fed this year after previously expecting two, and they think the ECB will probably hike rates once or twice in 2026 after pricing in the chance of a cut in February.

The yield on the U.S. 10-year Treasury bond was flat at 4.216%, and around 25 basis points higher since the war began. Yields rise as prices fall, and vice versa.

The U.S. dollar index, which measures the currency against a basket of six peers, was little changed at 99.75 after snapping a four-day streak of gains on Monday.

“We would be surprised if the FOMC (Federal Open Market Committee) indicated a strong direction on the impact of the war,” said Steve Englander, global head of G10 FX research at Standard Chartered in New York.

“It has no way of knowing how long the war will last or whether the biggest response will be on activity or inflation.”

The Japanese yen was steady at 159.02 per dollar, shy of the crucial 160 level despite verbal warnings from the Japanese authorities on Tuesday.

(Reporting by Harry Robertson in London and Gregor Stuart Hunter in Singapore; Editing by Shri Navaratnam, Thomas Derpinghaus and Pooja Desai)