Oil prices declined on Friday while US and European stock markets saw gains, as concerns over an escalation of the conflict in Iran appeared to subside.
The international crude benchmark, Brent, fell by over two per cent, impacting the share prices of major energy companies.
This market reaction followed US President Donald Trump’s statement on Thursday that he would decide on joining Israel’s strikes on Iran within the next two weeks.
Traders interpreted Trump’s remarks as a preference for negotiations to resolve the conflict, especially as top European diplomats met with Iranian Foreign Minister Abbas Araghchi in Geneva on Friday to discuss a “diplomatic solution.”
US indices opened slightly higher on Friday, though analysts anticipated low trading volumes due to a four-day weekend for many traders following the Juneteenth holiday. European stock markets gained in afternoon trading, while Asian equities closed the week with mixed results.
Kathleen Brooks, an analyst at XTB, noted that “News that President Trump would delay any decision on joining Israel’s attacks against Iran has boosted the market mood.”
She added that “Brent crude has dropped… as traders price out the worst-case scenario for geopolitics.”
In previous sessions, crude futures had surged and global equities slumped as the Israel-Iran conflict showed no signs of abating, leading investors to factor in the risk of tighter oil supplies and potential economic growth impacts.
Despite the immediate relief, investment analyst Dan Coatsworth of AJ Bell cautioned, “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.”
He also highlighted the potential importance of the meeting between European and Iranian ministers.
While the Middle East crisis continues to dominate headlines, Trump’s ongoing trade war remains a significant concern for investors as the deadline for a 90-day pause on his April 2 tariff blitz approaches.
David Sekera, Morningstar’s chief US market strategist, suggested that new trade agreements might only be finalised as these deadlines draw nearer. He warned that news regarding trade negotiations could have a disproportionate impact on markets.
In Europe, Eutelsat shares soared by 27 per cent on the Paris stock exchange after the French government announced a 1.35 billion euro ($1.5 billion) investment in the European satellite operator. French President Emmanuel Macron, speaking at the Paris Air Show, called for Europe to swiftly regain its competitiveness in the space sector amidst increasing American competition.
Key figures at around 1340 GMT:
- Brent North Sea Crude: DOWN 3.1 per cent at $76.41 per barrel
- West Texas Intermediate: DOWN 0.3 per cent at $73.32 per barrel
- New York – Dow: UP 0.3 per cent at 42,295.17 points
- New York – S&P 500: UP 0.4 per cent at 6,002.28
- New York – Nasdaq: UP 0.6 per cent at 19,656.24
- London – FTSE 100: UP 0.2 per cent at 8,804.94
- Paris – CAC 40: UP 0.8 per cent at 7,614.83
- Frankfurt – DAX: UP 1.3 per cent at 23,359.19
- Tokyo – Nikkei 225: DOWN 0.2 per cent at 38,403.23 (close)
- Hong Kong – Hang Seng Index: UP 1.3 per cent at 23,530.48 (close)
- Shanghai – Composite: DOWN 0.1 per cent at 3,359.90 (close)
- Euro/dollar: UP at $1.1517 from $1.1463 on Thursday
- Pound/dollar: UP at $1.3495 from $1.3429
- Dollar/yen: UP at 145.68 yen from 145.63 yen
- Euro/pound: DOWN at 85.33 pence from 85.36 pence
