GLOBAL MARKETS-Shares diverge, bonds steady as oil eases on Trump's Iran comments

Global stocks were mixed and bond markets steadied on ‌Tuesday ​after U.S. President Donald Trump paused a planned attack on Iran and said there was a good chance of a nuclear deal, sending oil prices lower.

Global stocks were mixed and bond markets steadied on ‌Tuesday ​after U.S. President Donald Trump paused a planned attack on Iran and said there was a good chance of a nuclear deal, sending oil prices lower. Trump said on Monday he had halted a planned resumption of attacks against Iran to allow time for negotiations to ‌take place on a deal to end the war, after Tehran sent a new peace proposal to Washington.

He subsequently said there was a "very good chance" the U.S. could reach an agreement with Iran to prevent Tehran from obtaining a nuclear weapon. European stocks rose 0.7%, further recovering ground lost on Friday when they dropped 1.5% as bond market jitters spread to equities.

Stocks in Europe, which is a net ‌importer of energy and has fewer major tech firms, remain below pre-war levels and have lagged far behind their U.S. peers. Futures for the U.S. S&P 500 slipped 0.3% as ‌memory chip and data storage companies fell in pre-market trading, after helping push U.S. equities to record highs in recent weeks as part of an AI boom.

"We've seen a lot of back and forth already," said Fabien Yip, a market analyst at IG, about the Iran talks. "Until we actually see real action happening (in the Strait of Hormuz), whereby ships are passing through safely and we see a material rebound in the numbers of traffic going through in the Strait, ⁠I think ​the market in general is shrugging off the commentary ⁠from either side."

Brent crude futures fell 1.1% to $110.90 a barrel on the back of Trump's comments, while U.S. crude was 0.4% lower at $108.30 per barrel. Both remained more than 50% above their pre-war levels. MSCI's broadest index of Asia-Pacific ⁠shares outside Japan fell 1.2% overnight.

The all-important artificial intelligence trade will be tested by earnings from chipmaker Nvidia that are due on Wednesday, with expectations sky-high for the world's most valuable company. "Nvidia is the market's shorthand for ​everything AI and this market's gains have been driven in large part by AI over the past few years," said Richard Reyle, chief investment officer at Questar Capital Partners.

BOND ⁠SELLOFF ABATES The fall in oil prices helped stem a steep selloff in global bonds on Tuesday, although worries remain about any lasting inflationary shock from the Iran war.

Yields on the benchmark 10-year U.S. Treasury note eased from a more than ⁠one-year ​high above 4.63% to 4.61%. Yields move inversely to prices. British bond yields fell after news reports said the most likely challenger to Prime Minister Keir Starmer will not overhaul the country's borrowing rules.

Markets are now pricing in rate hikes from major central banks this year on expectations policymakers will have to tighten policy to combat a resurgence in inflation driven by higher-for-longer energy ⁠prices. "Markets are still trading the same uncomfortable balance," said Florian Ielpo, head of macro at Lombard Odier Investment Managers.

"The micro story remains strong, with AI still acting as the main support ⁠for US equities, but the macro story is ⁠becoming less forgiving," he said, referencing rising oil prices and bond yields. In foreign exchange, the dollar has benefited from safe-haven demand since the onset of the war and was up 0.15% at 159.10 yen, putting traders on alert for any intervention from Tokyo to shore up its ailing ‌currency.

The euro was down 0.3% ‌at $1.162. Sterling fell 0.2% to $1.341.