Global Stock Index Flat With Oil Rallying on Iran Worries as Gold, Silver Rise

Global Stock Index Steady as Oil Prices Surge Amid Iran Tensions

Market Overview and Key Developments

By Sinéad Carew and Amanda Cooper

Stock Market Performance

NEW YORK/ LONDON, Feb 3 (Reuters) - MSCI's global equities gauge was barely changed on Tuesday as technology stocks pushed Wall Street lower while oil futures rallied after incidents between the United States and Iran and precious metal prices rose to regain some lost ground following a two-day rout.

Oil Price Movements

While diplomats were seeking to arrange nuclear talks between Iran and the United States, oil prices climbed more than $1 after the U.S. military shot down an Iranian drone approaching a U.S. aircraft carrier in the Arabian Sea, according to a Reuters report citing a U.S. official. Separately, Iranian gunboats approached a U.S.-flagged tanker in the Strait of Hormuz, maritime sources said. 

Currency and Commodity Trends

Meanwhile, the U.S. dollar was slightly lower after two sessions in a row of gains while the Australian dollar was the standout performer in foreign exchange markets on Tuesday after the central bank joined Japan as the only developed world economy to raise interest rates.

Investor anxiety rose with choppy trading in the CBOE volatility index, which picked up steam early on but in the late afternoon it pulled back from its 20.37 session high to close up 1.66 points at 18.

 On Wall Street, indexes ended lower with software stocks weighing on concerns about AI competition. Chipmaker Nvidia fell 2.8% and was the biggest weight, as Reuters reported that ChatGPT developer OpenAI has been seeking faster alternatives to Nvidia's AI chips.  

"Any AI related headlines right now are coming out as a negative and a headwind for the broader market. Under the surface there are areas of the market that are acting well but tech is getting hit pretty hard," said Sahak Manuelian, managing director for global equities trading at Wedbush Securities in Pasadena, California.   

Technology earnings were also on investors' minds with shares in chipmaker AMD falling 5% after-the-bell trade, following its 1.7% regular session loss, after its quarterly report. Shares in server equipment company Super Micro Computer rose more than 6% in late trade after its report.

At Tuesday's close, the Dow Jones Industrial Average was down 166.67 points, or 0.34%, at 49,240.99 while the S&P 500 finished down 58.63 points, or 0.84%, at 6,917.81 and the Nasdaq Composite fell 336.92 points, or 1.43%, to 23,255.19. 

MSCI's gauge of stocks across the globe rose 0.16 points, or 0.02%, to 1,043.93.

Earlier, the pan-European STOXX 600 index < .STOXX > finished up 0.1% for its second closing record in a row but trading was muted by a sharp selloff in software and advertising stocks.

While the heavyweight technology sector was the weakest in the S&P 500, finishing down 2.2%, energy was the strongest group, closing up 3.3% helped by rising oil prices.

Oil prices rallied more than 1% after Monday's 4% loss. Aside from Iran worries oil gained support from a U.S.-India trade agreement, which boosted hopes for global energy demand. And Russia's continued attacks on Ukraine fueled worries that Moscow's oil would remain sanctioned.

U.S. crude settled up 1.72%, or $1.07, at $63.21 a barrel while Brent settled at $67.33 per barrel, up 1.55%, or $1.03 on the day.

Commodities and the dollar have been whipsawed since U.S. President Donald Trump's nomination of Kevin Warsh to lead the Federal Reserve last Friday. While Warsh may be under pressure from Trump to cut interest rates, investors expect that he will look to shrink the Fed's balance sheet, which is seen as a negative for precious metals. 

But on Tuesday, spot gold rose 6.14% to $4,951.72 an ounce, after falling about 13% in the prior two sessions. Spot silver rose 7.58% to $85.42 an ounce on Tuesday after tumbling 6% Monday and 27% on Friday. 

Jack Janasiewicz, lead portfolio strategist at Natixis Investment Managers said Tuesday showed "a little bit of calmness returning back to the markets on the commodity side looking at gold and silver." 

In currencies, the Australian dollar strengthened 1.08% versus the greenback to $0.7022 after the Reserve Bank of Australia raised rates by a quarter point to 3.85%, citing above-target inflation and a tight job market.

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, took a step back after last week's rally against a range of currencies. The index fell 0.18% to 97.36, with the euro up 0.27% at $1.1821.

Against the Japanese yen, the dollar strengthened 0.09% to 155.74.

In U.S. Treasuries, yields dipped after rising earlier as traders evaluated possible shifts in Federal Reserve policy under Warsh as they faced U.S. economic data delays due to a partial government shutdown.

The yield on benchmark U.S. 10-year notes fell 0.8 basis points to 4.268%, from 4.277% late on Monday while the 30-year bond yield fell 1.1 basis points to 4.8983%.

The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, rose 0.2 basis points to 3.572%, from 3.57% late on Monday.

(Reporting by Sinéad Carew, Amanda Cooper, Tom Westbrook; Editing by Shri Navaratnam, Susan Fenton, Nick Zieminski and Daniel Wallis)