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Oil supply fears ripple through markets

Oil prices held near multi‑month highs on Friday as the intensifying conflict involving the US, Israel and Iran kept supply risks around the Strait of Hormuz in focus, fuelling concerns about renewed inflation pressures. Wall Street and major European indices closed lower on Thursday, with Treasury yields moving higher and weighing on risk assets. Asian equities were mixed on Friday but remained on track for sharp weekly losses, despite a temporary US waiver allowing India to resume Russian crude purchases. Later on Friday, investors will turn their attention to the US labour market report for further clues on the monetary policy outlook.

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

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Oil prices stabilised at a high level in Asian trading on Friday after five consecutive daily increases, with Brent crude oil trading around USD 85.35 and West Texas Intermediate (WTI) near USD 80.75 per barrel, both nearly flat on the day. Both benchmarks remained on course for weekly gains of more than 17% following sharp rises of nearly 5% and over 8% respectively in the previous session. The moves came as the conflict involving the US, Israel and Iran entered its seventh day on Friday, with continued missile strikes and infrastructure damage fuelling concerns over supply disruptions, particularly through the Strait of Hormuz, where about one-fifth of global oil shipments transit each day. Gold prices was a bit firmer amid safe-haven demand, with the metal trading around USD 5120 per ounce, while the US Dollar Index remained high as trader sought safety. Bitcoin lost some ground following a midweek spike and was trading near USD 70,600.

Asia stocks pressured despite India import exception

Asian equity markets traded mixed on Friday but were set for steep weekly declines. Concerns that fighting could disrupt supplies through the Strait of Hormuz added pressure on equities and currencies in major oil-importing countries. Japan’s Nikkei 225 was trading 0.5% higher but was on track for a 6% weekly loss, while Korea’s Kospi was little changed, heading for a weekly drop of nearly 11%. Australia’s S&P/ASX 200 was trading 1% lower on Friday and India’s Nifty 50 was down 0.6%, despite the US government issuing a 30-day waiver to India on Thursday to resume purchases of Russian crude, easing some supply concerns. Hong Kong’s Hang Seng Index was trading 1.7% higher and mainland China’s CSI 300 was up 0.2%.

US equities retreat, Treasury yields higher

US stock indices reversed course on Thursday, with the Dow Jones Industrial Average falling 1.6% to 47,954.74 points, the S&P 500 losing 0.6% to 6830.71 points and the Nasdaq 100 slipping 0.3% to 25,020.41 points, as rising oil prices and robust weekly labour market data reignited inflation concerns and pushed bond yields higher. The 2-year US Treasury yield was around 3.6%, while the 10-year yield was near 4.1%. The escalation of the Iran war, including attacks affecting Turkey, Lebanon and shipping near the Strait of Hormuz, has severely disrupted crude flows from the Persian Gulf and increased risk aversion among investors after a brief improvement in sentiment the previous day.

European stocks reverse gains

Major European equity indices reversed earlier gains on Thursday, with the euro-area benchmark EuroStoxx 50 dropping 1.5% and , as a renewed surge in oil prices linked to the Iran war unsettled investors. Travel and leisure stocks again came under pressure after a brief rebound the previous day. Switzerland’s SMI declined 1.5%, after data released Thursday showed Swiss unemployment remained at 3.2% in February, as the number of registered jobless fell 0.8% from January to 151,076 persons but was still 11.5% higher than a year earlier.

Corporate and economic calendar

Corporate news in focus: There is no major corporate news scheduled today.

Economic data in focus: euro-area gross domestic product (11:00), European Central Bank President Christine Lagarde speaks (11:00), US nonfarm payrolls (14:30), US unemployment rate (14:30) and US retail sales (14:30).

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