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Business

Wall Street slides as oil jumps to $107 after Trump rejects Iran peace proposal

The S&P 500 closed 0.8 per cent lower on Monday as crude jumped 3 per cent to about $107 and Treasury yields hit fresh multi-decade highs after Donald Trump rejected Iran's truce offer — while UK diesel prices hit a record near £2 a litre.

By Priya Raman · · 2 min read

Wall Street retreated on Monday as US Treasury yields climbed and oil prices jumped after Donald Trump rejected Iran’s offer of a seven-day truce in the Middle East war.

The S&P 500 closed 0.8 per cent lower, spending the entire session in the red, AFP reported. Earlier in the New York session, Reuters reported the Dow Jones Industrial Average down 384.11 points, or 0.74 per cent, at 51,446.37, the S&P 500 down 64.36 points (0.83 per cent) at 7,679.05, and the Nasdaq Composite down 268.66 points (0.99 per cent) at 26,800.06.

Crude prices jumped 3 per cent to around $107 a barrel, reviving inflation worries and driving longer-dated Treasury yields to fresh multi-decade highs. “Energy has been the one consistent upward pressure on inflation, and anything that continues to put pressure on inflation is going to be something that motivates the Fed to raise rates,” said Art Hogan, chief market strategist at B. Riley Wealth.

Iran announced its peace proposal at last week’s UN General Assembly in New York, saying it had been relayed to Washington through Qatari mediators. Trump said on Saturday he had rejected the offer, but told Axios on Sunday he expected US negotiators to continue talks this week.

Nvidia bucked the sell-off, gaining 2.1 per cent after unveiling a $150 billion share buyback — the chipmaker’s largest on record. Tesla dipped 3.2 per cent after JP Morgan cut its price target, citing weak third-quarter deliveries.

In Europe, London and Frankfurt closed 0.1 per cent down while Paris ended flat. Average UK diesel prices hit a record high just shy of £2 a litre, the RAC said. Investors also digested the US and China cutting tariffs on $60 billion of each other’s goods and extending their trade truce to 10 January.

Traders are now pricing in a 70 per cent chance of a Federal Reserve rate hike in October, with August’s PCE inflation report due Wednesday and September’s payrolls data on Friday.

Sources

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