By Mike Dolan
May 19 (Reuters) -
What matters in U.S. and global markets today
By Mike Dolan, Editor-at-Large, Finance and Markets
Global oil prices, stocks and bond yields levelled off on Tuesday as U.S. President Donald Trump held out hopes for a breakthrough in Iran peace talks, easing fresh tensions that had built again over the weekend.
Trump announced on Monday that he’d called off new attacks on Iran that had been planned for today, saying there was a “very good chance” of reaching a deal limiting
Iran’s nuclear programme.
I’ll get into that and more below.
But first, check out my latest column on what a Kevin Warsh-led Federal Reserve could mean for long bonds.
And listen to the latest episode of the Morning Bid daily podcast. Subscribe to hear Reuters journalists discuss the biggest news in markets and finance seven days a week.
CEASEFIRE ON A KNIFE EDGE
President Trump’s latest remarks came after Tehran sent a fresh peace proposal to Washington via mediator Pakistan. Crude prices ticked back on the news, coming off yesterday’s highs, though not by much, with Brent crude staying elevated over $110 per barrel on Tuesday morning.
The wider market reaction was modest. Investors are now weary of the back and forth and remain anxious about the fallout of the energy market squeeze, especially as commercial oil inventories run down their final weeks of supply, according to a warning from International Energy Agency chief Fatih Birol on Monday.
Asian shares were shaky on Tuesday, with South Korea’s KOSPI falling more than 3%, while Wall Street futures edged down before the bell. European shares rose in early trading, however.
Meantime, restive bond markets calmed down somewhat overnight, partly due to the oil price retreat. The pullback in gilt yields, however, owed more to developments in the brewing struggle for the leadership of Britain’s ruling Labour Party.
Andy Burnham, mayor of Manchester and the leading contender to challenge Prime Minister Keir Starmer, said he was committed to the government’s existing self-imposed fiscal rules. Gilts were also buoyed by the IMF’s call for the Bank of England to hold off on raising interest rates for now, assuming energy prices fall.
In corporate news, a possible mega-merger in the U.S. energy sector caught investors' attention on Monday as NextEra announced it was seeking to buy Dominion in a $66.8 billion deal. The deal - which would value Dominion shares at a 23% premium to the standing market price - would create the third-biggest U.S. energy firm. Dominion shares jumped 10% on the bid.
Skyrocketing energy demand is part of the gigantic AI investment story that continues to be one of the major driving forces in markets. For more on that front, all eyes will be on Nvidia tomorrow, as the chipmaking behemoth releases its results.
Chart of the day
The IEA said on Monday that commercial oil inventories were depleting rapidly, with only a few weeks' worth left because of the Iran war and the closure of the Strait of Hormuz.
Overall global oil supply will fall by around 3.9 million barrels per day over 2026 due to the war, the agency said. U.S. gas pump prices continue to rise, meantime, with the average regular price now being $4.53 per gallon and some states seeing much higher rises over the past month.
Today's events to watch
• Canada April CPI (8:30 a.m. EDT)
• Atlanta Fed’s interim president Cheryl Venable speaks
• Final day of the meeting of G7 finance ministers and central bankers in Paris
• Russian President Vladimir Putin visits China
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Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
(By Mike Dolan)
