The surge in AI-related stocks stalled as oil prices reversed sharply during early European trading. Brent crude, which briefly advanced nearly 2% toward USD 102 per barrel, later fell more than 1% to trade near USD 98. West Texas Intermediate crude also turned lower, dropping over 1% to below USD 93.50 a barrel.
Saudi Arabia is testing its key east-west pipeline, signaling the potential restart of this major crude export route that bypasses the Strait of Hormuz. Market expectations are growing that diplomatic efforts could push Iran to reopen the strait. US and Iranian diplomats are gathered at the UN General Assembly in New York, with investors hopeful for a breakthrough, while a Kyodo report noted Iran has offered to reopen the strait should the US lift its blockade on Iranian vessels.
The Nasdaq Composite reached a fresh record high on Monday, buoyed by Meta rolling out its consumer-focused AI product Muse, though Nasdaq futures were largely flat on Tuesday. Chipmakers that rallied strongly in the previous session gave back some gains, with both AMD and Intel easing more than 1% in pre-market trading after jumping 10% and 14%, respectively, on AI-driven demand for chips and data centers. In Asia, Samsung Electronics edged up 0.9%, while rival SK Hynix fell 1.5%. European tech shares also lost steam, with ASML barely moving up 0.2%.
The drop in oil prices offered some relief to energy-sensitive sectors. The Stoxx Europe 600 index opened lower but closed 0.6% higher after Brent crude retreated. Dow Jones Industrial Average futures reversed earlier losses to gain 0.3%, while S&P 500 futures inched up 0.05%.
In bond markets, Treasury yields tracked oil prices lower. The 10-year Treasury yield slipped 2.6 basis points to 4.930%, and the 30-year yield fell 1.8 basis points to 5.268%. Eurozone government bond yields also declined. The dollar continued to strengthen against the yen, pushing the pair past 157, supported by the Bank of Japan's rate hike last week that fell short of market expectations and by rising bets that the Federal Reserve will keep tightening. Bitcoin retreated from recent highs but held near USD 85,900, while New York gold futures traded sideways with a slight dip to USD 4,360 per troy ounce.
Japanese markets were closed for a holiday and will resume trading on Thursday. Later on Tuesday, former President Donald Trump is set to address the UN General Assembly, with investors watching closely for any remarks that could influence oil prices. In the eurozone, attention is turning to Germany's political situation, as Chancellor Friedrich Merz's government faces mounting pressure.