London (AFP) – Oil prices retreated Friday while US and European stock markets mostly gained ground as concerns over a war escalation in Iran eased. But investors remain wary of further volatility in the coming days, with analysts citing uncertainty over the Middle East conflicts and the lingering uncertainty over US tariffs.
The Brent international crude benchmark contract dropped three percent, weighing on the share prices of energy majors, after US President Donald Trump said he would decide whether to join Israel’s strikes on Iran within the next two weeks. Traders said it suggested Trump preferred negotiations to end the fighting, as top European diplomats met Iran’s Foreign Minister Abbas Araghchi in Geneva on Friday to discuss a “diplomatic solution” to end the war.
US indices opened slightly higher Friday before falling back, though analysts said volumes were likely to be lacklustre with many traders taking a four-day weekend after Thursday’s Juneteenth holiday in the US. Asian equity indices closed out the week mixed, and the dollar retreated against its main rivals.
“News that President Trump would delay any decision on joining Israel’s attacks against Iran has boosted the market mood,” said Kathleen Brooks, an analyst at trading firm XTB. “Brent crude has dropped…as traders price out the worst-case scenario for geopolitics.” Crude futures had soared and global equities slumped in recent sessions as the Israel-Iran conflict showed no signs of easing, with investors pricing in the risk of tighter oil supplies that would likely weigh on economic growth.
However, the main US oil contract, WTI, found support Friday, a reflection of low trading volumes after the Thursday market close and data indicating a large drop in American crude stockpiles, analysts said. “While the immediate prospect of a US intervention in Iran may have diminished, the fact this is reportedly a two-week hiatus means it will remain a live issue for the markets going into next week,” said Dan Coatsworth, an investment analyst at AJ Bell.
While the Middle East crisis continues to absorb most of the news, Trump’s trade war remains a major obstacle for investors as the end of a 90-day pause on his April 2 tariff blitz looms. “While the worst of the tariffs have been paused, we suspect it won’t be until those deadlines approach that new agreements may be finalised,” said David Sekera, chief US market strategist at Morningstar. “Until then, as news emerges regarding the progress and substance of trade negotiations, these headlines could have an outsize positive or negative impact on markets,” he said.
In Europe, Eutelsat shares soared 30 percent on the Paris stock exchange after the French government said it would lead a 1.35 billion euros ($1.5 billion) investment in the European satellite operator. French President Emmanuel Macron urged a “speedy reconquest” for Europe in the space sector in the face of growing American competition, in a speech at the Paris Air Show.
– Key figures at around 1540 GMT –
Brent North Sea Crude: DOWN 3.1 percent at $76.44 per barrel
West Texas Intermediate: DOWN 0.3 percent at $73.25 per barrel
New York – Dow: UP 0.3 percent at 42,311.23 points
New York – S&P 500: FLAT at 5,981.74
New York – Nasdaq: DOWN 0.3 percent at 19,485.47
London – FTSE 100: DOWN 0.2 percent at 7,589.66 (close)
Paris – CAC 40: UP 0.5 percent at 7,589.66 (close)
Frankfurt – DAX: UP 1.3 percent at 23,350.55 (close)
Tokyo – Nikkei 225: DOWN 0.2 percent at 38,403.23 (close)
Hong Kong – Hang Seng Index: UP 1.3 percent at 23,530.48 (close)
Shanghai – Composite: DOWN 0.1 percent at 3,359.90 (close)
Euro/dollar: UP at $1.1521 from $1.1463 on Thursday
Pound/dollar: UP at $1.3465 from $1.3429
Dollar/yen: UP at 145.88 yen from 145.63 yen
Euro/pound: UP at 85.56 pence from 85.36 pence
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© 2024 AFP
