Oil jumps on Iran strikes as Tesla earnings miss weigh on tech
Escalating US military strikes on Iran have driven crude oil to six-week highs and stoked inflation fears, pressuring US technology stocks and pointing to a weaker open for Indian equities.
The US military conducted another night of strikes targeting Iran’s government and infrastructure, while Iranian forces continued to blockade and target ships in the Strait of Hormuz. President Donald Trump stated that Tehran wants a deal but is not "ready" yet. The escalation immediately lifted energy prices, with Brent crude climbing 1.58% to $95.56 a barrel and US West Texas Intermediate rising 1.30% to $87.96.
Those oil prices revived concerns about inflation just as Wall Street waited for major earnings reports. The Nasdaq Composite bore the brunt of the selling, falling 0.57% to 25,690.90, while the S&P 500 dropped 0.14% to 7,498.96 and the Dow Jones Industrial Average closed effectively flat at 52,218.58.
Tesla dragged on the technology sector after reporting second-quarter earnings that missed analyst expectations. Despite a 26% year-over-year revenue increase to $28.2 billion, the electric vehicle maker posted profits of $1.1 billion, translating to 33 cents per share against estimates of 53 cents. The company also recorded its first quarter of negative free cash flow in over two years, burning through $1.09 billion.
Elsewhere in tech, the picture was mixed. Server makers Super Micro Computer and Dell Technologies surged 19.84% and 9.3% respectively, and Nvidia gained 2.30%. However, Microsoft fell 1.86%, Meta Platforms dropped 2.58% and SpaceX slipped 6.70%.
Asian equities diverged from the US slump, with the MSCI Asia Pacific gauge climbing 0.8%. South Korea’s Kospi rallied 3.61% and Japan’s Nikkei 225 added 1.18%, driven by regional chip stocks. Indian markets are poised to buck this regional trend. Gift Nifty was trading around 23,887, a 101-point discount to the previous close, signaling a negative start after the Nifty 50 and Sensex both fell nearly 1% on Wednesday.
Safe-haven assets reflected the geopolitical tension. Spot gold held steady at $4,133.82 an ounce, while the dollar index stabilized at 101.11. The Japanese yen languished near a 40-year low.
“Despite the weakness in the benchmark index, rotational buying across sectors continues to offer ample stock-specific trading opportunities," said Ajit Mishra, SVP of Research at Religare Broking Ltd. "We therefore recommend maintaining a cautious stance, focusing on relatively stronger stocks while adhering to disciplined risk and position management.”
