London (AFP) – Oil prices slid and stock markets advanced Wednesday as Iran said it had allowed around two dozen ships to transit the Strait of Hormuz, easing concerns about the apparent impasse on ending the war in the Middle East. While Asian markets mostly fell in the wake of losses on Wall Street Tuesday, US and European indexes gained as bond yields fell back from inflation-driven highs.
Investor focus was also on Wednesday’s results update from AI chip giant Nvidia, due after the Wall Street close, that should offer a fresh assessment of a sector that has driven market optimism this year. But despite dropping nearly three percent, the international benchmark Brent North Sea crude remained close to $110 a barrel, far above pre-war levels. That has spurred worries that inflation could remain elevated even if a swift resolution to the Middle East war is found.
Government bond rates have reached the highest levels in decades on worries that the Middle East war will keep energy prices high well into this year, potentially derailing economic growth and pressuring government finances. “Oil remains the central macro pressure point,” said Sucden Financial analyst Viktoria Kuszak. “We expect the combination of higher yields, a firm dollar and unresolved energy risk to keep risk appetite constrained, with Nvidia earnings the next key test for equity sentiment,” she added.
Earlier Wednesday, a South Korea-flagged tanker transited the Strait of Hormuz, one of 26 that Iran’s Revolutionary Guards later said it had allowed to pass over the past 24 hours. Since the United States and Israel began their war with Iran, the Strait of Hormuz—an energy corridor through which 20 percent of global crude usually transits—has been effectively closed to shipping. A ceasefire on April 8 brought a halt to a conflict that has roiled the global economy, but with Washington and Tehran seemingly reluctant to resume the fighting, a war of words has taken its place.
In France, the chief of Credit Agricole, one of the country’s biggest banks, told investors Wednesday that given the economic and geopolitical turmoil “nothing is arguing for optimism.” Olivier Gavalda warned at the bank’s shareholder meeting of likely interest rate hikes in Europe to counter growing inflation pressures, “which could lead to a decline in both consumer spending and investment.” He added, “The internal data we analyse suggests a steep drop in the business climate and a significant erosion in household confidence.”
– Key figures at around 1340 GMT –
Brent North Sea Crude: DOWN 2.6 percent at $108.35 a barrel
West Texas Intermediate: DOWN 2.4 percent at $101.62 a barrel
New York – DOW: UP 0.2 percent at 49,460.29 points
New York – S&P 500: UP 0.3 percent at 7,375.23
New York – Nasdaq: UP 0.5 percent at 26,002.20
London – FTSE 100: UP 0.3 percent at 10,361.43
Paris – CAC 40: UP 0.7 percent at 8,033.91
Frankfurt – DAX 30: UP 0.3 percent at 24,471.53
Tokyo – Nikkei 225: DOWN 1.2 percent at 59,804.41 (close)
Hong Kong – Hang Seng Index: DOWN 0.6 percent at 25,651.12 (close)
Shanghai – Composite: DOWN 0.2 percent at 4,162.18 (close)
Euro/dollar: DOWN at 1.1592 from $1.1606 on Tuesday
Pound/dollar: DOWN at 1.3391 from $1.3401
Dollar/yen: UP at 159.08 from 159.04 yen
Euro/pound: DOWN at 86.57 from 86.60 pence
burs-bcp/js/jj
© 2024 AFP
