US-Iran standoff sends oil up, dents stocks

Oil prices surged 5% in two days, reaching around US$88 a barrel, as negotiations between the United States and Iran over a peace deal stalled. The absence of progress in reopening the Strait of Hormuz added to the uncertainty. US President Donald Trump demanded Iran pay compensation for war-related casualties in a move that complicated efforts to ease tensions.

Analysts describe the situation as a "Mexican standoff," expecting one side to yield first. Brent crude futures have climbed to their highest level since July 31, nearly 25% higher than early July lows. The market is currently hovering between US$75 and US$95. Global stocks suffered from the geopolitical turmoil, while US Treasury yields edged higher.

The European STOXX 600 and MSCI's All-World index showed slight gains, while the Nasdaq and S&P 500 futures remained flat. In a related development, Nvidia partnered with six major financial institutions to provide over US$500 billion in funding for AI infrastructure. Intel raised US$20 billion through a share sale, its first since 1971.

Currency markets saw the yen weaken beyond 159 and the Australian dollar inching closer to US$0.705.