Oil prices traded at five-month highs on Friday, with benchmark crude contract Brent North Sea rising above $115 a barrel, as the Middle East conflict raged on
Global markets were contending “with concerns around surging oil prices and the sustainability of AI spending”, noted AJ Bell head of financial analysis Danni Hewson
“Oil is at five-month highs amid speculation there may be renewed US-Israeli strikes after next month’s US midterm elections
“Escalating tensions in Ukraine and the prospect of increased energy demand as the northern hemisphere heads into the winter months are only adding to the upwards pressure on oil and gas prices,” Hewson added
Benchmark international oil contract Brent crude for December delivery rose as high as $11545.
Wall Street’s main indices slid at the start of trading, with the blue-chip Dow sinking one percent
“The ongoing agitation of the oil market has contributed to the lack of a buy-the-dip impulse” that has often helped Wall Street stocks avoid pulling lower this year
High oil prices also “keep inflation concerns and rate hike concerns on the front burner”, he added
Higher borrowing costs would make it more expensive for companies to borrow, which could pull the rug out from under breakneck development of AI that is being financed by debt and has underpinned the rise in equity markets this year
Stock markets mostly dropped in Europe following some poorly-received earnings from Gucci parent Kering and Swedish group Volvo Cars
Asian equity indices closed out the week mixed as technology firms managed to claw back some of the week’s hefty losses
Rising energy prices have influenced movements across stock markets in recent days along with developments in the AI sector
Facebook parent Meta and chip equipment maker Lam Research saw their share prices dive this week despite above-forecast earnings for the pair
“Strong results are no longer enough if the outlook fails to match an already demanding valuation,” noted Fawad Razaqzada, a markets analyst at traders FOREXcom.
“Investors are becoming much less forgiving”
Non-AI companies have also seen their share prices slump this week
Kering shed more than 16 percent in Paris afternoon deals on Friday after the French luxury group published results that failed to reassure investors about a turnaround at its key Gucci brand
Volvo Cars meanwhile plunged more than 26 percent after it said US tariffs and strong competition from local brands in China pushed it into a third-quarter loss
In response, the company announced a new five-billion-kronor savings plan it said would lead to about 2,000 job cuts in Sweden and 500 more globally
Aside from energy markets, AI and earnings next week, focus will fall firmly on interest-rate meetings for the US Federal Reserve and European Central Bank, as well as an update on US economic growth data
Brent North Sea crude: UP 19 percent at $115.29 per barrel
West Texas Intermediate: UP 23 percent at $101.76 per barrel
New York – Dow: DOWN 10 percent at 52,362.08 points
New York – S&P 500: DOWN 05 percent at 7,628.15
New York – Nasdaq Composite: DOWN 04 percent at 25,914.05
London – FTSE 100: DOWN 06 percent at 10,666.06
Paris – CAC 40: DOWN 09 percent at 7,739.94
Frankfurt – DAX: DOWN 11 percent at 25,088.15
Tokyo – Nikkei 225: DOWN 03 percent at 62,693.16 (close)
Hong Kong – Hang Seng Index: UP 07 percent at 23,093.37 (close)
Shanghai – Composite: UP 09 percent at 3,690.48 (close)
Euro/dollar: DOWN at $11198 from $1.1217 on Thursday
Pound/dollar: DOWN at $13374 from $1.3399
Dollar/yen: DOWN at 15644 yen from 156.86 yen
Euro/pound: DOWN at 8376 pence from 83.78 pence