Oil prices rose by more than $1 a barrel on Tuesday as the U.S. dollar index fell to its lowest level in more than a week and investors shifted their focus away from tensions in the Middle East to the state of global economies.

Brent crude futures rose by 1.6%, to settle at $88.42 a barrel while the  U.S. West Texas Intermediate crude futures climbed  by 1.8%, to $83.36 a barrel. However, the U.S. dollar index weakened after S&P Global data revealed U.S. business activity cooled in April to a four-month low due to  weaker demand.

U.S. business activity cooled in April registering  a four-month low as a result of  weaker demand, while rates of inflation eased slightly even as input prices (the costs associated with acquiring resources or materials used in the production process of goods or services) rose sharply. The U.S. Composite PMI Output Index, which tracks the manufacturing and services sectors, falls to 50.9 this month from 52.1 recorded in March. A reading above 50 indicates expansion in the private sector. The deceleration was a result of reduced rates of expansion in both manufacturing and services sectors, with activity declining to its lowest levels in three months for manufacturing and five months for services. The US economy outperforms its global peers despite an hawkish stance of 525 basis points since 2022.

Japan’s factory activity contracted but approached the break-even point in April, an indication  the key sector is finally ticking up after months of sluggishness. Japan’s manufacturing purchasing managers’ index (PMI) rose to 49.9 in April from 48.2 in March, remaining below the 50.0 threshold separating growth from contraction. The service sector has continued to be the main catalyst for growth, it was promising to observe a further reduction in the decline of manufacturing output in April. Additionally, Japan composite PMI, which combines both manufacturing and service sector activity, climbed to 52.6 in April, matching the highest level seen in August.

South Africa’s rand reversed some of its losses on Tuesday as global investor fears over rising tensions in the Middle East reduced drastically. Essentially, as concerns about geopolitical instability lessened, investors regained confidence in the South African rand, leading to its appreciation. The rand traded at 19.1125 against the dollar , 0.44% stronger than its previous close while the dollar index retreated against a basket of currencies and was last trading 0.38% lower. In February, South Africa’s primary economic indicator, which gathers information on vehicle sales, business sentiment, money circulation, and additional factors, increased by 1.7% compared to the previous month.