Oil prices rally, US data dents chances of Fed rate hike

The US threatened to ramp up economic pressure on Iran, including extending a naval blockade.

NEW YORK/LONDON - US and European shares fell on Aug 14 and oil prices rose more than US$1 a barrel as markets monitored tense US-Iran talks and digested new data that dented expectations for a Federal Reserve rate hike next month.

Faltering talks to end the Iran war left oil and gas prices poised for sizeable weekly gains. The US threatened to ramp up economic pressure on Iran, including extending a naval blockade.

US consumer sentiment deteriorated in early August amid the rising cost of living because of the Middle East conflict, a survey showed on Aug 14.

The US dollar fell on a surprise drop in US retail sales, supporting gold prices. The data further reduced expectations of a Federal Reserve rate hike at next month’s meeting.

US Treasuries fell on Aug 14 after an initial rally driven by the retail sales data lost momentum.

The S&P 500 fell from record highs, under pressure as shares in chip equipment maker Applied Materials declined, to end the session down 0.17 per cent at 7,785.76 points. Chipmakers including Broadcom and Intel also dropped.

The Nasdaq declined 0.28 per cent to 26,729.16 points, while the Dow Jones Industrial Average declined 0.20 per cent to 53,732.41 points.

“A lot of the drivers in the market right now are around various parts of AI,” said Thomas Martin, senior ⁠portfolio manager at GLOBALT Investments in Atlanta.

European shares finished lower on Aug 14 and snapped a four-week winning streak, as rising crude prices and renewed geopolitical tensions offset support from a resilient earnings season.

MSCI’s gauge of stocks across the globe fell 0.79 points, or 0.07 per cent, to 1,160.01.

MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.29 per cent higher at 1,640.08.