Iranian Foreign Minister Abbas Araghchi’s visit to Islamabad had fanned hopes for new negotiations with Washington at the weekend but US President Donald Trump scrapped a planned trip by envoys on Saturday.
Both main international oil contracts pushed higher, with Brent crude rising to more than US$108 a barrel as the crucial Strait of Hormuz waterway remained largely closed, although lingering hopes that a deal could eventually be reached tempered gains.
Stock markets were mixed, with both the S&P 500 and Nasdaq edging higher to finish at all-time records. But the Dow retreated, along with several leading European and Asian indices.
“It may be that hopes of a diplomatic breakthrough were pretty faint to start with, and markets are now in wait-and-see territory ahead of a heavy week of earnings and economic touchpoints,” said Derren Nathan, head of equity research at Hargreaves Lansdown.
With energy prices remaining high, the US Federal Reserve is expected to keep interest rates unchanged on Wednesday, followed by similar decisions from the European Central Bank and Bank of England.
The US calendar also includes a heavy schedule of earnings from tech giants such as Apple and Meta Platforms, as well as from older industrial companies like Ford and ExxonMobil.
“So far, the earnings season has been relatively strong. The environment is very clear: we are not in a recession,” said Adam Sarhan of 50 Park Investments.
Markets will “remain bullish until proven otherwise,” Sarhan added.
“Investors have been encouraged by corporate news flow over the past few weeks, leading to higher equity prices,” said Russ Mould, investment director at AJ Bell.
He added, however, that “higher oil for longer spells trouble for inflation, which in turn could act as a headwind for the economy.”
Tehran’s top diplomat blamed Washington on Monday for the failure of talks in Pakistan this month – the first and only round of negotiations to end the war.
Araghchi blamed the United States for its “excessive demands,” adding that “safe passage through the Strait of Hormuz is an important global issue.”
Trump told Fox News that if Iran wanted talks, “they can call us” – though he has said the cancellation does not signal a return to hostilities.
Citing a US official and two other sources with knowledge of the matter, US media outlet Axios reported on Sunday that Iran had sent a new proposal to end the war centred on reopening the Strait of Hormuz and ending a US naval blockade there, with nuclear negotiations postponed for a later stage.
The S&P 500 edged up 0.1 percent to 7,173, the Nasdaq rose 0.2 percent, to 24,887, while the Dow fell 0.1 percent, to 49,168. (AFP)
