New York, May 5 (AP) Wall Street rebounded and oil prices retreated early Tuesday despite an exchange of fire between the US and Iran near the Strait of Hormuz.
Futures for the S&P 500 rose 0.3 per cent, while futures for the Dow Jones Industrial Average inched up 0.1 per cent. Nasdaq futures climbed 0.5 per cent.
Tensions in the Middle East escalated when the United Arab Emirates, a US ally, said it came under attack from Iran for the first time since the ceasefire last month.
The fragile ceasefire between the US and Iran was tested after the US military said it had sank six Iranian small boats targeting civilian ships, while two US-flagged ships successfully passed through the Strait of Hormuz as part of US President Donald Trump's “Project Freedom” plan under which the United States attempts to guide stranded ships through the strait.
The key waterway for oil and gas transport remains largely closed despite repeated demands from the US for Iran to reopen the strait and as the United States imposed a sea blockade on Iranian ports.
“We are seeing the first signs of the ceasefire between the US and Iran breaking down amid a re-escalation in the Persian Gulf,” ING Bank analysts Warren Patterson and Ewa Manthey wrote in a note Tuesday.
“Continuation of Project Freedom' risks further escalation,” they wrote. “Any relief from stranded vessels making their way through the Strait will be temporary, with very few inbound vessels moving into the Persian Gulf.”
Oil prices came back down slightly after surging on Monday.
Brent crude, the international standard, fell USD 1.14 to USD 113.30 per barrel. Before the war began in late February, it was trading near USD 70. Benchmark US crude slipped USD 1.84 to USD 104.58 per barrel.
Outside of the war, markets are focused on the US earnings season.
Pinterest soared 17.5 per cent after the online bulletin board topped Wall Street's first-quarter sales and profit targets as its active monthly users jumped 11 per cent to 631 million. It was the tenth straight quarter of double-digit user growth for the San Francisco company.
Budweiser maker Anheuser-Busch Inbev also topped analyst sales and profit forecasts on strong beer sales. Its shares jumped more than 6% in premarket.
Coinbase jumped 3.6 per cent after the cryptocurrency trading platform said in a regulatory filing that it was letting go of 700 employees, about 14 per cent of its workforce.
Elsewhere, in Europe at midday, Britain's FTSE 100 fell 1.2 per cent, France's CAC 40 was up 0.5 per cent, and Germany's DAX gained 1.2 per cent.
Asian regional trading was thin, with markets in Japan, South Korea and mainland China closed for holidays.
Hong Kong's Hang Seng fell 0.8 per cent to 25,898.61, while Taiwan's Taiex gained 0.2 per cent.
Australia's S&P/ASX 200 lost 0.2 per cent to 8,680.50 after the central bank raised its benchmark interest rate to 4.35 per cent, saying conflict in the Middle East had sharply increased fuel and commodity prices that were already adding to inflation. The cash rate hike on Tuesday was the Reserve Bank of Australia's third quarter percentage point rise this year.
The bank said Australia's inflation for the year through March was 4.6 per cent. The bank manipulates interest rates to steer inflation toward a target band of 2 per cent to 3 per cent.
India's Sensex lost 0.4 per cent. (AP) RD
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