Stocks Slide Despite Oil Price Drops Amid Ongoing Middle East Tensions

The global stock market experienced a mixed performance on Tuesday, with European and US stocks mostly trading lower despite oil prices retreating from recent highs. Investors were weighing the prospects for increased tanker traffic through the Strait of Hormuz.

The hopes for easing Middle East tensions were dashed at the weekend when US President Donald Trump rejected Iran's offer for a seven-day truce, sending oil prices sharply higher on Monday.

However, prices reversed course after Trump said he expects talks with Iran to continue, as well as reports that considerable volumes are continuing to flow from the region. Crude oil’s slide to $91 a barrel reflects growing hopes that Middle East tensions can ease, while the restoration of Saudi pipeline flows is helping offset disruption through the Strait of Hormuz.

The benchmark US crude contract WTI was trading around $91 per barrel on Tuesday, while its international equivalent, Brent crude, was above $104 per barrel. Analyst Axel Rudolph noted that oil prices were reacting favourably to a report that oil exports out of the Middle East hit a post-war high.

Wall Street's main indices were lower in late morning trading, with sentiment hit by data showing US consumer confidence plunged sharply in September to a level not seen since 2014. In Europe, London and Paris both finished in the red but Frankfurt ended the day with a small gain. Oil prices still remain elevated, however, and government bond yields are trading at multi-year highs, contributing to losses on some Asian stock markets Tuesday.