Oil has done Wall Street a favour this morning. Brent has kept sliding since breakfast as talks between the US and Iran grind on in Doha, US crude has slipped back under $100 a barrel, and stock futures are holding on to a modest rebound after Friday’s bruising chip sell-off. It is a breather rather than a recovery, and it arrives at the start of what could be the busiest week of the autumn.
The mood is calmer, not carefree. Tankers were still being hit in and around the Strait of Hormuz over the weekend, Iran is refusing to budge on its uranium stockpile, and between now and Friday traders face the US midterm elections, earnings from roughly a fifth of the S&P 500 and the October jobs report. Cheaper oil buys time. It does not settle any of those questions.
The Situation Right Now
S&P 500 futures are up about 0.5% near 7,654, against Friday’s cash close of 7,580.07, when the index fell 1.8%. Nasdaq 100 futures are up around 0.8% and Dow futures about 0.6%. Friday was ugly for technology, with the Nasdaq Composite down 2.9% as the chip rout that started with Intel spread right across the industry, so a bounce of this size is modest by comparison.
Europe is flat to slightly higher. The FTSE 100 is barely changed around 10,732, Germany’s DAX is up about 0.2% and France’s CAC 40 is up around 0.3%. Asia was firmer overnight, led by South Korea’s KOSPI, up more than 2%, and India’s Nifty 50, which rose 1.7% as Reliance Industries jumped on falling crude prices and solid results. The VIX, Wall Street’s fear gauge, has eased to about 19.1.
What Changed Since This Morning?
The oil slide has gone further. Brent was around $110 at breakfast and is now near $108.40, down about 4.4% on the day, while West Texas Intermediate, the US benchmark, has dropped to around $99.25. The move has come despite fresh reports of tankers struck in the Gulf and Iran’s Revolutionary Guard claiming that two vessels hit mines. Traders are, for now, choosing to believe the diplomats over the headlines from the water.
Bond markets have noticed. The UK 10-year gilt yield has fallen to about 5.23%, from roughly 5.29% this morning, the clearest sign yet that cheaper energy is easing some of the inflation worry that has weighed on gilts for months. The euro and the pound are both firmer against a slightly weaker dollar. US futures, by contrast, have not moved much since breakfast: the early bounce has held, but it has not grown.
The Biggest US Market Story: Oil Gives Tech Some Breathing Room
The link between oil and technology shares is not obvious at first glance, but it matters this week. Expensive energy keeps inflation stubborn, which keeps the Federal Reserve leaning towards another rate rise in December, which in turn pushes up the yields investors use to value fast-growing companies. When oil falls, that chain loosens a little, and the stocks that depend most on future growth tend to feel it first.
That is roughly what is happening before the open. The chipmakers that were hammered on Friday are among the better performers in pre-market trading, while oil majors are slipping. The rebound is small, though, and it comes after hedge funds sold technology shares at one of the fastest rates in a decade last month, according to Goldman Sachs prime brokerage data. Investors have cut their exposure sharply, which can make bounces sharp but short-lived.
The bigger question is whether the oil relief lasts. Goldman Sachs has just raised its December Brent forecast to $105 a barrel from $90, citing supply risks in the Middle East, which suggests that even after today’s fall, the bank does not see oil going back to where it was before the disruption. Until ships are moving freely through Hormuz, any deal talk is a hope rather than a fact.
Stocks Moving Before The Open
Chipmakers are clawing back a little of Friday’s damage. Micron is up about 2.2% and SanDisk about 2% in pre-market trading after falls of 5.3% and 13.5% respectively on Friday. Taiwan Semiconductor’s US shares are up around 1.8%, AMD about 1.6%, Nvidia around 1.3% and Broadcom about 1.1%. Intel, whose weak forecast started the rout, is down a further 0.7% after losing almost 29% on Friday, a reminder that the worst-hit name is not joining in the bounce.
Airlines and cruise operators are the natural winners from cheaper fuel. American Airlines is up about 2.2%, United around 2% and Delta about 1.6%, while Norwegian Cruise Line and Carnival are up between 1% and 2%. Exxon Mobil and Chevron are each down about 1% as crude falls.
Palantir is up about 1.2% ahead of its results this week, while Apple and Meta are slightly lower. Among smaller names, Perion Network has jumped about 30% after agreeing to be bought by Affle for $11.70 a share in cash, and Inovio Pharmaceuticals has more than tripled after US regulators granted accelerated approval to its first drug.
FX & Dollar
The dollar is a touch weaker, with the dollar index down about 0.2% near 101.65. The euro has gained around 0.4% to about $1.1208 and the pound is up about 0.2% near $1.3417, helped by lower oil, which matters more to energy-importing Europe and the UK than to the US. The yen remains weak, with the dollar near ¥157.90, keeping the risk of official intervention from Tokyo on traders’ radar.
Bonds
US Treasuries are fairly steady. The 10-year yield is near 4.92% and the two-year, which tracks expectations for Fed policy, is about 4.59%. Markets still put high odds on a December rate rise from the Fed, which held rates at 3.75% to 4.00% last week. That is why Friday’s jobs report matters so much: a strong number would make a hike look more likely, while a weak one would revive talk of a slowdown.
Gilts are the standout. The UK 10-year yield has dropped about seven basis points to around 5.23%, while German yields are only slightly lower near 3.30%. Cheaper oil helps the UK more than most, because energy has been a big part of the country’s inflation problem.
Commodities
Brent is near $108.40 and WTI around $99.25, both down more than 4%. The key question for oil is whether tankers actually start moving freely through Hormuz, and ADNOC’s chief executive warned at a conference in Abu Dhabi today that the disruption has already drained close to a billion barrels from global inventories. That kind of shortfall does not disappear overnight, even if a deal is struck.
Gold is up about 0.4% near $3,915 an ounce for futures, and silver is stronger, up about 2% to around $50.25. Copper is up around 0.7%. Bitcoin is flat near $77,700.
Today’s Remaining Catalysts
The US cash market opens at 14:30 UK time, an hour later than last week now that US clocks have gone back. S&P Global’s final US manufacturing PMI, a survey of factory managers, is due at 14:45 UK, followed by the ISM manufacturing index at 15:00 UK. ISM is the more closely watched of the two, and its prices-paid section will show whether factories are still feeling the pinch from energy costs.
Beyond today, Tuesday brings the midterm elections and job openings data, a large slice of the S&P 500 reports through the week, including Apple, Palantir, AMD, Uber and McDonald’s, and Friday ends with the October jobs report. Any headline from Doha or the Gulf can move oil at any moment.
Levels Traders Are Watching
For the S&P 500, Friday’s close of 7,580 is the first reference below, with 7,650 in futures marking this morning’s rebound. On the Nasdaq Composite, Friday’s close near 25,437 is the line traders will watch to see whether the chip selling resumes. In oil, $100 for WTI and $105 for Brent, the Goldman forecast, are the obvious psychological markers. In bonds, 4.9% and 5% on the US 10-year matter, along with 5.2% on the UK 10-year. In currencies, $1.34 for the pound and ¥158 for the dollar against the yen stand out. These are reference levels, not targets.
Where This Leaves Us
The bias going into the open is cautiously constructive. The evidence is that cheaper oil is easing pressure on bonds and giving beaten-up technology shares some room, while airlines and other fuel-sensitive businesses benefit directly. But the bounce is shallow after a heavy week of selling, and it rests on diplomatic talk rather than ships moving through the strait.
The opportunity, for patient traders, lies in seeing whether the chip rebound holds once the cash session opens and after the ISM data, rather than chasing pre-market moves. The risk is that a fresh tanker attack or a breakdown in the Doha talks sends oil sharply higher again, putting the Fed’s December decision back in play. The view would change if Brent climbs back above $110, or if the chipmakers fail to hold their gains in the first hour of trading.
Markets to watch are Brent crude, the Nasdaq 100, the memory chipmakers, the US two-year yield and the UK 10-year gilt. For beginners, the lesson is that one market can quietly move many others: a fall in oil can lift airline shares, lower bond yields and give technology stocks room to recover, all on the same morning. If you want to see how your own trading decisions measure up in a week like this, take the Samuel & Co Trading Assessment as a sensible next step.
