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Markets eye Fed as oil steadies after OPEC shock

Oil prices held steady midweek after jumping earlier in the week on news that the United Arab Emirates will quit OPEC, while broader market sentiment remained cautious ahead of the US Federal Reserve’s (Fed) interest-rate decision later Wednesday. US equities ended Tuesday mixed as weakness in artificial-intelligence-related stocks weighed on the technology-heavy indices despite solid corporate results in parts of the market, and Asian bourses were trading in different directions on Wednesday as investors digested both the OPEC surprise and firmer Australian inflation data. Investors are also bracing for a heavy slate of quarterly results from several of the "Magnificent 7 " tech giants, including Alphabet, Amazon, Meta Platforms and Microsoft, which could set the tone for global equity markets in the days ahead.

  • Data
  • Autore Shane Strowmatt, Senior Investment Writer
  • Tempo di lettura 5 minuto

Middle East financial markets
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Oil prices stabilised after an increase on Tuesday, with Brent crude oil futures hovering around USD 105 per barrel and West Texas Intermediate (WTI) futures just under USD 100. The gain of more around 3% on Tuesday came after the United Arab Emirates announced it will leave the OPEC producers’ group with effect from 1 May, ending nearly six decades of membership. The Gulf state, which was OPEC’s third-largest oil producer in February behind Saudi Arabia and Iraq, said the move follows a comprehensive review of its production policy and capacity and is in its national interest. The decision comes after weeks of missile and drone attacks on the UAE and shipping near the Strait of Hormuz by fellow OPEC member Iran, which have severely disrupted the country’s oil exports. The UAE’s energy ministry said it remains committed to oil market stability and will continue to cooperate with producers and consumers, while gaining greater flexibility to respond to market conditions outside the cartel. Gold prices were little changed, trading around USD 4600 per ounce on Thursday, while the US Dollar Index strengthened modestly.

Asia markets mixed after OPEC shock

Asia-Pacific equities traded in different directions on Wednesday as investors digested a surprise decision by the United Arab Emirates to leave OPEC next week and renewed concerns about the growth outlook for US artificial intelligence developer OpenAI. The Hang Seng index in Hong Kong rose about 1.4% and mainland China’s CSI 300 was 0.9% higher. Australia’s S&P/ASX 200 slipped 0.4% after data showed quarterly consumer prices rose about 1.4%, pushing annual inflation into the mid-4% range and reinforcing expectations that the Reserve Bank of Australia, which has already raised rates twice this year, will keep monetary policy tight. South Korea’s Kospi gained 0.8%, with Japanese markets closed for a holiday.

US tech stocks weighed down by AI names

US equities were mixed on Tuesday, with the technology-heavy Nasdaq 100 falling 1% as weakness in heavily weighted artificial intelligence stocks offset a broadly steady performance in the wider market. The S&P 500 slipped 0.5%, while the Dow Jones Industrial Average was virtually unchanged, supported by strong quarterly results from beverage group Coca-Cola and gains in blue chips such as software giant Microsoft and health insurer Unitedhealth. A critical Wall Street Journal article suggesting AI developer OpenAI had recently missed some business targets hit shares of key partners, dragging down Oracle by more than 4%, cloud specialist Coreweave by almost 6%, and chipmakers Nvidia and AMD, which lost 1.6% and 3.4% respectively. Investors remained cautious ahead of the Fed’s interest-rate decision on Wednesday and amid higher oil prices linked to the ongoing conflict involving Iran.

US consumer confidence inches higher

In macroeconomic data, US consumer confidence edged up in April, with The Conference Board’s headline index rising to 92.8 from March’s revised 92.2, according to data released on Tuesday. The Present Situation Index slipped to 123.8 as views on current business conditions deteriorated, while the Expectations Index improved to 72.2 on slightly better sentiment about future jobs and income despite more pessimism on business conditions. Consumers remained concerned about higher petrol prices amid Middle East tensions and elevated inflation, and recession fears strengthened as more respondents judged a downturn over the next 12 months as very likely or already underway.

UBS first-quarter profit surges 80%

Swiss banking group UBS reported net profit attributable to shareholders of USD 3 billion for the first quarter on Wednesday, an 80% increase from a year earlier and above market expectations. Underlying profit before tax rose 54% to USD 3.9 billion, also comfortably beating market forecasts of USD 3.2 billion. UBS said it remained on course to complete a USD 3 billion share buyback before its second-quarter results, after repurchasing USD 900 million of shares during the first three months of the year. A day earlier, the Swiss Market Index closed 0.1% lower, while the Euro Stoxx 50 declined 0.5%.

Corporate and economic calendar

Corporate news in focus: Quarterly figures from AbbVie, Alphabet, Amazon, AstraZeneca, BYD, Deutsche Bank, eBay, GSK, Iberdrola, KLA, Mercedes-Benz Group, Meta Platforms, Microsoft, Qualcomm, Regeneron Pharmaceuticals, TotalEnergies, UBS, and Walmart.

Economic data in focus: Spanish Consumer Price Index (09:00), German Consumer Price Index (14:00), US durable goods orders (14:30), building permits (14:30), Bank of Canada interest rate decision (15:45) and Federal Reserve interest rate decision (20:00).

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Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.