Stocks Turn Choppy Into the Weekend, Oil Retreats: Markets Wrap
(Bloomberg) — Trading in equities turned choppy heading into the weekend, while oil prices retreated as investors weighed efforts by the US and Israel to ease concerns over the Iran war.
The MSCI Asia Pacific Index fluctuated following a 2.6% slide on Thursday — when strikes on energy assets in the Middle East stoked fears of a prolonged economic impact from the conflict. S&P 500 futures rose after the underlying benchmark recovered from a 1% drop to finish the last session down 0.3%. Brent crude declined from its highest closing level since July 2022 to trade around $107 per barrel.
Israel’s Prime Minister Benjamin Netanyahu said the nation will no longer target energy infrastructure, and added that the war will end a lot faster than people think as Iran is no longer able to enrich uranium or manufacture ballistic missiles. Meanwhile, US President Donald Trump told reporters he’s “not putting troops anywhere” after being asked about the possibility of deploying ground troops.
Traders are parsing every geopolitical headline as the conflict has upended the energy supply chain. Prices of gasoline and jet fuel have surged while cooking gas shortages have triggered fistfights in India. The International Energy Agency has called the war the biggest supply disruption in the history of the oil market.
“The long shadow of the energy crisis is far from lifted,” said Hebe Chen, a senior market analyst at Vantage Global Prime in Sydney. “It would be naive to call this anything more than a fragile exhale.”
Trading in Asia was thin on account of holidays in Indonesia, Malaysia and the Philippines. Japanese markets were also shut, meaning there was no cash trading in Treasuries during Asian hours.
A slump in shares of heavyweight Alibaba Group Holding Ltd. also weighed on the MSCI Asia gauge. The Chinese tech giant’s stock lost as much as 6.4% in Hong Kong after it reported sales that missed estimates, dragged by sluggish growth in its core e-commerce business. Meanwhile, shares of AIA Group Ltd. jumped nearly 5% after its results and the announcement of a buyback plan.
The MSCI Asia benchmark is up 0.5% for this week, after falling in each of the previous two weeks.
The risk of a global inflation shock has also complicated the policy outlook for global central banks. Investors in bond markets around the world are rushing to bet on higher interest rates amid the jump in energy prices.
Australia’s benchmark bond yields climbed to the highest level in almost 15 years on Friday, while New Zealand’s two-year yields hit the highest in about a year.
What Bloomberg Strategists Say
“Bonds are signaling that any declines in oil prices are likely to be shallow, and that the supply shocks for oil and gas will go on feeding inflation pressures.”
— Garfield Reynolds, MLIV Asia Team Leader. Click here for the full analysis.
On Thursday, UK’s two-year rate jumped 31 basis points to 4.40% after the Bank of England said it “stands ready” to act to prevent inflation from accelerating. The US Treasury 10-year yield fell two basis points to 4.25%. However, the policy-sensitive two-year yield rose two basis points to 3.79%.
As the war reduces prospects for a US interest-rate cut in the near term, gold is heading for the biggest weekly loss in six years. The precious metal — widely viewed as a haven — has dropped every week since the US and Israel attacked Iran last month.
Elsewhere in markets, a gauge of the dollar rose 0.2% on Friday after slipping 0.7% in the last session.
Treasury Secretary Scott Bessent noted the US is looking to remove sanctions that it has long imposed on Iranian oil in an effort to lower surging energy prices. The White House doesn’t plan to ban the export of oil and gas, an official said Thursday.
“Both US and Israel and some other countries are trying to manage risks as war’s impact via energy is broadening,” said Anna Wu, a cross asset strategist at Van Eck Associates Corp. in Sydney. “The narrative from the US side looks slightly more promising, but the consensus changes by the day.”
Corporate Highlights:
Unwilling to cede control over New World Development Co., Hong Kong’s billionaire Cheng family is now betting on the revival of the city’s property market and mulling options like a public share sale to meet the embattled developer’s debt obligations. Micron Technology Inc. warned that it will need to spend heavily on production to meet burgeoning demand, overshadowing a generally upbeat forecast. Alibaba Group Holding Ltd. aims to quintuple cloud and AI revenue to $100 billion annually in five years. Xiaomi Corp.’s Hong Kong-listed shares fell in Hong Kong trading amid concern the company’s freshly updated electric vehicle will hit profitability after an only minor price increase. A co-founder of Super Micro Computer Inc. was charged in New York with conspiring to illegally divert billions of dollars in artificial intelligence technology to China. One of Eli Lilly & Co.’s most highly anticipated experimental medicines helped diabetic patients lose more weight than any drug currently on the market. Darden Restaurants Inc. raised its full-year outlook as it expects an extra week of promotions at Olive Garden to lift sales. Uber Technologies Inc. plans to invest as much as $1.25 billion in Rivian Automotive Inc. to help launch a robotaxi fleet that will be available in the US, Canada and Europe over the next five years. Some of the main moves in markets:
Stocks
S&P 500 futures rose 0.2% as of 1:05 p.m. Tokyo time Australia’s S&P/ASX 200 fell 0.5% Hong Kong’s Hang Seng fell 0.6% The Shanghai Composite rose 0.2% Euro Stoxx 50 futures rose 0.7% Currencies
The Bloomberg Dollar Spot Index rose 0.2% The euro fell 0.3% to $1.1557 The Japanese yen fell 0.4% to 158.39 per dollar The offshore yuan fell 0.3% to 6.8971 per dollar Cryptocurrencies
Bitcoin rose 0.4% to $70,746.88 Ether rose 0.3% to $2,152.75 Bonds
Australia’s 10-year yield advanced three basis points to 5.01% Commodities
West Texas Intermediate crude fell 2.1% to $93.58 a barrel Spot gold rose 1.6% to $4,723.67 an ounce This story was produced with the assistance of Bloomberg Automation.
–With assistance from Richard Henderson, Abhishek Vishnoi, David Finnerty and Toby Alder.
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