Oil bubbles as Middle East strikes escalate; Saudi to join nuclear club

Brent crude oil prices continued to push higher as US President Donald Trump threatened to destroy Iranian infrastructure if the Islamic Republic attacked ships going through the Strait of Hormuz.

Meanwhile, President Trump approved a deal to provide Saudi Arabia with a civilian nuclear programme, courtesy of American companies.

Stocks on Wall Street wavered as earnings from Alphabet and Tesla loom after the bell, with the Google-parent and Intel’s report on Thursday seen as the next sense-check on the artificial intelligence infrastructure buildout, while Super Micro Computer surged after the AI-server maker reported fatter margins than analysts predicted.

And the resources-heavy ASX is poised to open higher when trading opens across the Tasman, as gold prices followed the rise in oil.

No time for peace

Brent crude oil futures jumped 3.5% to US$94.22 a barrel at 7am in Auckland as tensions in the Middle East remained high, with the US and Iran signalling that there weren’t any negotiations to de-escalate the current conflict and the elevated rhetoric on retaliatory strikes.

In a post on the Truth Social platform, US President Trump said his military would destroy a bridge or power plant any time Iran shot at a ship in the Strait of Hormuz.

“Energy markets remain a key watchpoint, with Brent crude climbing further to US$94.25 a barrel as Middle East tensions continue to threaten global supply routes,” Moomoo market strategy consultant Greg Boland said in a note. “Higher oil prices are keeping upward pressure on bond yields and inflation expectations, but for now investors remain focused on earnings, with the outlook from Alphabet and Tesla expected to be the next major catalyst for global markets.”

Meanwhile, the White House was reportedly preparing to sign a 30-year accord with Saudi Arabia for US companies to help the Middle East nation develop nuclear infrastructure, with a provision to build a uranium-enrichment facility if a joint study found that was warranted.

Stocks on Wall Street were mixed ahead of the first megacap earnings from Alphabet and Tesla after the close of trading, with both weaker heading into the close.

The S&P 500 was marginally softer, while the tech-heavy Nasdaq Composite dipped 0.3% and the Dow Jones Industrial Average nudged up 0.1%.

Circling AI

Chipmaker Nvidia was the biggest gainer on the Dow, despite the decline for tech companies. The White House accused China’s Moonshot AI of violating US export controls to build its Kimi K3 model that revived fears about rival Chinese systems.

Meanwhile, the Financial Times reported that Samsung Electronics was in talks to invest up to €1 billion into French AI firm Mistral at a €20 billion valuation, and Advanced Micro Devices agreed to sell billions of dollars of chips to Anthropic, while also investing as much as US$5 billion in the Claude maker in the latest circular deal in the AI sector.

Super Micro Computer surged 20% after reporting wider margins than expected, with rivals Dell Technologies and Hewlett Packard Enterprises joining it higher, while telco AT&T gained after beating forecasts for growth among its wireless phone subscribers and cigarette-maker Philip Morris International advanced on growing demand for its smoke-free products.

GE Vernova sank 8% as its increased revenue outlook missed expectations.

Stock markets were stronger across the Atlantic ahead of the European Central Bank’s policy review, which is expected to hold rates before hiking again in September. Meanwhile, UK inflation eased in June, with consumer prices rising at a slower pace than economists predicted.

The UK’s FTSE 100 rose 1.2%, while Germany’s DAX advanced 0.6% and France’s CAC 40 climbed 0.9%, with plane manufacturer Airbus rallying on an upbeat earnings target.

European antitrust regulators approved the Paramount Skydance acquisition of Warner Bros Discovery, provided the merged entity ditched its distribution joint venture with Universal Pictures.

Fintech Revolut, which was granted an Australian banking licence this week, kicked off a secondary sale for some staff at a valuation of US$115 billion, Bloomberg reported.

Australian futures are pointing to a 0.8% gain for the S&P/ASX 200 index when trading opens across the Tasman, with gold futures up 1.6% at US$4,143 an ounce.

The kiwi dollar traded at 58.15 US cents at 7am from 58.27 cents yesterday.

No major local data is scheduled for today.

Reporting by Paul McBeth. Image from Edoardo Cuoghi on Unsplash.