Global Markets Cautious as US-Iran Tensions Rise, Oil Prices Climb

International markets showed restraint Thursday amid ongoing Lunar New Year celebrations and growing concerns about escalating tensions between the United States and Iran. Oil prices continued climbing on fears of supply disruptions, while technology stocks gained ground following major AI chip deals.

Markets across Asia remained subdued Thursday as many regions continued observing Lunar New Year festivities, while global investors kept a watchful eye on mounting tensions between the United States and Iran that could spark the next major geopolitical crisis.

The two countries have maintained a contentious relationship centered around Iran’s nuclear program, with American officials claiming Iran harbors military intentions while Iranian leaders maintain their nuclear activities serve peaceful purposes. Although this week’s diplomatic discussions in Geneva showed some advancement, the White House confirmed Wednesday that significant gaps remain between the nations.

According to a senior U.S. official speaking to Reuters, Iran plans to present a proposal outlining potential solutions to resolve the ongoing disputes.

However, heightened American military presence in the oil-rich region has kept market watchers anxious. Rabobank Senior Global Strategist Michael Every warned that risks favor a potential U.S. military action after markets close Friday, suggesting any such operation would likely extend for weeks rather than concluding by Monday’s market opening.

These concerns have driven oil prices higher, building on gains from the previous trading session as fears mount over possible supply interruptions. Thursday saw Brent crude futures climb 0.36% to reach $70.60 per barrel, while U.S. crude increased 0.43% to $65.47.

In contrast, equity markets found support from renewed enthusiasm surrounding artificial intelligence developments, particularly after Nvidia revealed this week a multi-year agreement to supply Meta Platforms with millions of current and next-generation AI processors.

Market analysts noted this announcement provided crucial relief for technology shares, which had declined this month due to concerns about excessive valuations and uncertainty regarding when AI investments might translate into meaningful revenue increases.

Currency markets saw the U.S. dollar strengthen after Federal Reserve meeting minutes revealed no urgency to reduce the central bank’s benchmark interest rate, with multiple officials expressing willingness to implement increases if inflation remains persistent.

The released minutes exposed internal disagreements at the Fed, especially regarding artificial intelligence’s impact on America’s economy, with some policymakers anticipating a productivity surge that could help control inflation, while others warned that substantial AI investments might create financial instability.

Thursday’s key market-moving events include Walmart’s earnings report, weekly U.S. unemployment claims figures, and speeches from Federal Reserve officials Bostic, Bowman, Kashkari, and Goolsbee.