* Trump unhappy with latest Iranian proposal, official says
* Tech stocks slide on AI spending worries
* UAE sets date to leave OPEC, OPEC+ (Price updates)
NEW YORK, April 28 (Reuters) – Stocks fell and oil prices rose on Tuesday as investors weighed the escalation in the Iran conflict and news that the United Arab Emirates is cutting ties with OPEC, while AI concerns weighed on stock markets.
US bond prices also fell, with a leak on concerns about the impact of higher energy prices on the currency.
US President Donald Trump is unhappy with Iran’s latest proposal to end the two-month war, a US official said, ending hopes of a resolution to the conflict that has disrupted energy supplies, fueled inflation and killed thousands. The conflict is at a critical stage and energy and other supplies are still unable to cross the vital Strait of Hormuz.
The UAE said on Tuesday it would quit OPEC and OPEC+, dealing a blow to the oil-exporting group and its key leader Saudi Arabia, at a time when Middle East conflicts have caused a historic energy shock. Oil prices briefly rallied on the news, but Brent ended up hovering near three-week highs while WTI breached $100 per barrel for the first time since April 13.
“The UAE’s departure shows how difficult it can be to keep the wagon together in difficult times,” said Brian Jacobsen, chief economic strategist at Annex Wealth Management. “The UAE is the third largest producer of OPEC and the share it has is far below its capacity.”
He said that even if the reaction is muted, “in the long run it gives OPEC less power in the markets.”
US crude rose 3.93% to $100.16 a barrel and Brent rose to $111.13 per barrel, up 2.68% on the day.
BENEFITS AND AI IN ANALYSIS
The tech-heavy Nasdaq Composite fell more than 1% as investors questioned whether the so-far unstoppable artificial intelligence can continue to deliver meaningful returns for investors. The Wall Street Journal reported that AI heavyweight OpenAI missed internal targets for weekly users and revenue, raising concerns about parent ChatGPT’s ability to support its capital spending on data centers.
“That puts pressure on the Nasdaq and the S&P because technology and communications services make up about 40% of the average,” said Art Hogan, chief market strategist at B. Riley Wealth.
“If OpenAI sees some destruction, that will shuffle the deck a little bit in terms of what the leadership looks like.”
The Dow Jones Industrial Average rose 9.08 points, or 0.02%, to 49,176.87, the S&P 500 fell 39.47 points, or 0.55%, to 7,134.44 and the Nasdaq Composite dropped 256.03 points, or 1.03%, to at 1.03,6%.
Tech stocks related to OpenAI, such as Oracle and CoreWeave, fell more than 3% each.
The MSCI gauge of global shares fell 8.04 points, or 0.75%, to 1,066.96.
The pan-European STOXX 600 index fell 0.37%, the emerging markets gauge fell 0.75% and MSCI’s broad index of Asia-Pacific shares outside Japan fell 0.69%. Japan’s Nikkei index fell 1% after hitting a record high on Monday.
Investors are also focused on the earnings of major US technology companies Microsoft, Alphabet, Amazon, Meta Platforms and Apple which will also test the AI-driven rally.
High oil prices continued to weigh on inflation. The yield on the 2-year Treasury note, which usually moves in line with the Federal Reserve’s expected interest rate, rose 3.9 basis points to 3.844%, from 3.805% late Monday.
“The increase in yields follows the increase in oil prices,” said Will Compernolle, chief strategist at FHN Financial.
“That may come from an abstract perspective … it seems that the daily market situation regarding the US-Iran is changing even if the fundamentals are the same,” he said.
The yield on the benchmark US 10-year note rose 2.3 basis points to 4.36%, from 4.336% late Monday, while the 30-year bond yield rose 1 basis point to 4.9523% from 4.942%.
Elsewhere, the dollar index – which measures the greenback against a basket of currencies including the yen and euro – rose 0.15%. The British pound fell 0.1% against the dollar and the euro was little changed. The dollar has been one of the few safe-haven assets amid the Iran conflict, although it has given up most of its gains in March over the past few weeks.
BANK OF JAPAN DIFFERENCES RATE
The BOJ left short-term rates unchanged at 0.75%, in the first central bank meeting this week that could provide evidence of the economic impact of the dispute.
The yen initially strengthened on the idea that a rate hike was now in play, but ended up 0.1% lower at 159.54 per dollar. A breach above the $160-per-dollar threshold has markets wary that Tokyo may step in to support its currency. The US Federal Reserve, the Bank of England and the European Central Bank are due to announce decisions later this week.
All are expected to keep rates unchanged but the market’s attention will be on comments from policymakers about price pressures. (Reporting by Rodrigo Campos in New York; additional reporting by Karen Brettell, Niket Nishant and Utkarsh Hathi; Editing by Emelia Sithole-Matarise and Nick Zieminski)
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