Oil prices ease back as Trump cans Iran nuclear deal

Blue-chip stocks on Wall Street turned positive and oil prices fell after President Donald Trump announced the US would withdraw from the Iran nuclear deal.

Many investors had expected his decision and oil prices had run higher amid concerns that a withdrawal would hurt Iranian exports and further reduce global supply.

After briefly turning positive immediately after the mid-afternoon announcement, stocks fell, then gradually recovered.

At the close, the Dow Jones Industrial Average was ahead 2.89 points, or 0.01%, to 24,360.21. The S&P 500 slipped less than a point to 2671.92 and the Nasdaq Composite was marginally ahead, by  0.02%, to 7266.90.

Mr Trump delivered harsh words for the deal, calling it “horrible,” “one-sided” and “disastrous.” He said the US would institute “the highest level of economic sanctions” against Iran.

The US would also sanction any nations that helped Iran pursue nuclear weapons. Western allies of the US that also signed the deal – France, the UK and Germany – all opposed the withdrawal.

“The Iran deal is defective at its core,” Mr Trump went on, citing Israeli Prime Minister Benjamin Netanyahu’s announcement last month of what he called new evidence that Iran maintained a secret plan to build nuclear weapons but repeatedly lied about it.

“We have definitive proof that this Iranian promise was a lie,” Mr Trump said.

Oil prices drop
Immediately after the announcement, US crude dropped 1.7% to $US68.58 a barrel after earlier falling about 3% and crossing $US70 a barrel on Monday for the first time since 2014.

Brent futures, the global benchmark, fell 1.7% to $US74.86 a barrel but were up about 11% over the past month, buoyed by expectations that the White House would back away from the nuclear deal.

Stocks, meanwhile, have struggled to find their footing in recent sessions. Earnings season largely topped expectations but failed to light a spark in the market.

Boeing shares dropped 0.5%. It is the only US company to have signed deals with Iran worth $US20 billion for aircraft.

Chief Executive Dennis Muilenburg said last month that deliveries had been deferred beyond 2018 because of uncertainty over sanctions.

The S&P 500 remains down about 7% from its January high as geopolitical tensions, trade concerns and worries about slowing global growth contribute to investor reluctance.

Utilities posted the steepest losses in the S&P 500, dropping 2.5% while shares of energy companies were volatile but were off just 0.1%.

The WSJ Dollar Index, which tracks the US dollar against a basket of other major currencies, added 0.3%.

The 10-year Treasury yield climbed to 2.985% from 2.950% on Monday. 

The Stoxx Europe 600 rose 0.1%. France’s CAC 40 slipped 0.2%, Germany’s DAX fell 0.3% and the UK’s FTSE 100 eased 0.02%.