A global rally in artificial intelligence-linked stocks stalled, while oil prices turned lower after Saudi Arabia moved closer to reopening a critical oil pipeline and hopes mounted for a diplomatic settlement to reopen the Strait of Hormuz.
Nasdaq futures were flat after the index closed at a new record high Monday, spurred by enthusiasm around Meta's launch of consumer-focused AI product Muse. Excitement about a broadening of demand for the chips and data centers that power AI saw gains of 10% and 14% respectively for chip makers AMD and Intel in the last session. Both companies lost more than 1% premarket.
In Asian trade, Korean chip giant Samsung Electronics rose 0.9%, while peer SK Hynix lost 1.5%. European tech stocks also lost momentum, with ASML nudging up just 0.2%.
Elsewhere in equity markets, lower oil prices boosted energy-sensitive stocks. Europe's Stoxx 600 gained 0.6% following the fall in Brent, after opening in the red. Futures for the Dow Jones Industrial Average reversed earlier losses to rise 0.3%, while the S&P 500 edged up 0.05%.
Oil dramatically changed course in the European morning. After rising nearly 2% to trade close to $102 a barrel, Brent crude oil contracts fell more than 1% to trade near $98. WTI contracts also changed course, falling more than 1% to below $93.50 a barrel. Saudi Arabia ran tests on its critical East-West oil pipeline, suggesting the country is close to reopening a major export route that bypasses the Strait of Hormuz.
Investors are also hoping for a diplomatic breakthrough as American and Iranian diplomats from both countries gather in New York for the United Nation's General Assembly. Market sentiment was lifted by a report in Japan's Kyodo News Agency that Iran is willing to reopen the Strait of Hormuz provided the U.S. ceases its blockade on Iranian ships.
In fixed income, Treasury yields continued to move in lock step with oil prices. Ten-year Treasury yields fell 2.6 basis points to 4.930%, while 30-year yields fell 1.8 basis points to 5.268%. Eurozone government bond yields also slipped.
The dollar continued to strengthen against the yen, trading above 157 yen. Traders are responding to the Bank of Japan rate hike last week that turned out less hawkish than expected, while expectations for further U.S. Federal Reserve hikes strengthen the greenback.
Bitcoin pulled back from its highs in the last session but held at around $85,900.New York gold contracts continued to tread water, falling slightly to around $4,360 a troy ounce.
Japanese markets are closed for holidays until Thursday.
President Trump's address to the U.N. General Assembly due later Tuesday will be carefully watched for their impact on oil prices. Eurozone investors are keeping an eye on political developments in Germany, where the leadership of Chancellor Friedrich Merz is under increased pressure.