Oil Slips $3.36 to $100.85 on Iran Talks, US Futures Rise After Tech Sell-off

Oil prices fell sharply on Monday as renewed diplomatic efforts between the United States and Iran raised hopes for a quicker resolution to regional tensions. Brent crude, the international benchmark, dropped 2.8% to $110.24 per barrel. U.S. benchmark crude lost 3.1%, reaching $100.85 a barrel. This decline follows a period of volatility driven by fears over a potential return to all-out war in the region.

Equity markets showed mixed signals as investors digested the latest earnings reports and geopolitical news. U.S. futures advanced after Wall Street stocks posted their worst day since June on Friday. The S&P 500 fell 1.8% and the technology-heavy Nasdaq composite declined 2.9%. The Dow Jones Industrial Average slid 1.1% during that session. Investors are now focused on Tuesday's midterm elections, where concerns about artificial intelligence spending and data centers have emerged alongside inflation.

In Asia, sentiment varied by country. Japan’s Nikkei 225 slipped 0.3% to 63,081.86 after giving up early gains. Shares of SoftBank Group, an investor in OpenAI, dropped 1.6%. Kioxia Holdings plunged 15.8% as its earnings forecasts disappointed analysts. In contrast, South Korea’s Kospi index rose 2.2% to 5,859.08. Samsung Electronics added 1.8%, and memory chipmaker SK Hynix jumped 3.8%. The Nikkei has fallen more than 7% over the past month, while the Kospi dropped more than 16% in the same period.

Other Asian markets reflected this divergence. Taiwan’s Taiex index was 0.7% lower, with chipmaker TSMC shedding 1.7%. Hong Kong’s Hang Seng gained 0.5% to 23,411.49. The Shanghai Composite index rose 1.1% to 3,638.03. This gain occurred despite China reporting that factory activity returned to contraction territory in October, suggesting economic momentum may have slowed. Chinese media reported that the country's central bank and securities regulatory body met with financial institutions to discuss market support measures.

The debate over artificial intelligence spending is intensifying. Sunil Tirumalai of UBS Global Research noted that while the AI boom is not necessarily unraveling, the debate is entering a new phase. He stated that investors have become distinctly more nervous about companies with weaker balance sheets or larger financial commitments. Tirumalai added that some cracks have appeared and the central question is whether the money spent can generate adequate financial returns. Apple is scheduled to report earnings later in the day, following recent reports from Alphabet and Amazon that rattled markets.

Currency markets also shifted slightly. The U.S. dollar rose to 157.83 Japanese yen from 157.49 yen. The euro traded at $1.1186, up from $1.1160. Iran’s top diplomat said in an interview shared on his Telegram channel that Iranian negotiators were in Qatar discussing a proposal that could reopen the Strait of Hormuz within two days if the U.S. meets several conditions. He clarified that no direct talks were being held with the U.S. and that the final outcome depends on answers to Iranian questions.

In Australia, the S&P/ASX 200 lost 0.6% to 8,856.50. India’s Sensex rose 1.3%. The movement in oil prices provides a counterpoint to the tech stock selloff seen in the U.S. on Friday, indicating that energy markets are currently more sensitive to diplomatic signals than equity markets are to earnings surprises.