US open: Stocks flat as Iran's nuclear deal sparks fears of oil oversupply

US stocks opened flat on Tuesday after a deal over Iran's nuclear programme fuelled fears of oversupply in the oil market.

Just after 1500 BST, the Dow Jones Industrial Average was up seven points to 17,984.36, while the S&P 500 was flat and the Nasdaq gained five points.

Iran deal

Oil prices headed for their lowest settlement price since mid-April after six world powers and Iran reached an agreement, which will see economic sanctions lifted in exchange for the country accepting limits on its nuclear activities.

West Texas Intermediate fell 0.69% to $51.84 a barrel, while Brent crude lost 1.10% to $57.22 a barrel.

“With Iran’s oilfields operating well below full capacity the worrying thought for oil bulls is that the ongoing oversupply situation will only intensify as the year goes on and output increases,” said IG’s market analyst Chris Beauchamp.

“Iran has never featured particularly highly on the list of market concerns, but the deal, coming so soon after Greece’s apparent reconciliation with its creditors, should provide further fuel to the global equity bounce.”

In company news, semiconductor devices provider Micron Technology surged 8.69% ahead of the bell, after a report late Monday suggested China’s Tsinghua Unigroup Ltd. had submitted a bid to buy US firm for $23bn.

Starbucks climbed 0.22% after announcing a deal to expand its operations in sub-Saharan Africa starting from next year.

JP Morgan rose 0.31% as the banking giant kicked off the reporting season for major US banks by posting an increase in second quarter profits.

However, sector peer Wells Fargo & Co declined 0.33% after its second quarter results disappointed Wall Street's analysts.

After the closing bell, Yum! Brands and CVS Health are among the firms set to report second quarter results.

“The impact of the dollar, a key obstacle for the Fed and the blight of the last few quarters for some companies, will be heavily scrutinised once more, this time with the long-rumoured September lift-off date in mind,” said Spreadex’s financial analyst Connor Campbell.

Tuesday data

US retail sales dropped 0.3% in June, according to data released by the US Commerce Department, falling short of analysts’ expectations for a 0.2% rise.

"Unexpectedly weak retail sales data adds to signs that the US economy is slowing again after pulling out of the soft patch earlier in the year," said Markit's chief economist Chris Williamson.

"Any signs of slower growth could easily dissuade the Fed from hiking interest rates later this year, pushing the first rate rise into 2016."

Meanwhile, according to the Bureau of Labor Statistics, US import prices declined 0.1% month-on-month in June, falling short of expectations of a 0.1% increase.

Kansas City Fed President Esther George, a non-voting member of the FOMC, will give a speech on the economy and monetary policy in Kansas City at 0115 BST on Wednesday.

Elsewhere, European markets relinquished Monday’s Greece-fuelled gains, while Asian stocks were mixed.

The dollar slumped 0.69% against the pound, losing 0.52% and 0.27% against the euro and the yen respectively, while gold futures climbed 0.11% to $1,156.70p.