Stocks Drop as Oil Rises and Iran Talks Are in Limbo – Europe Market Wrap
A record-breaking run in US markets came to a stop as Middle East peace talks remained in limbo, pushing Brent crude beyond $100 per barrel.
S&P 500 futures fell 0.5%. The drop indicates that Wall Street is taking a breather after rising 9% in April on the back of stellar earnings and the longest-ever rally in chipmakers. Brent climbed 1.5% to roughly $103.40 per barrel as the US and Iran continued to choke the Strait of Hormuz. The Dollar rose 0.2%, as Treasury rates climbed throughout the curve.
US stocks have recovered from the turbulence caused by the Iran conflict, which disrupted around 20% of global oil shipments. Resurgent confidence about AI and excellent corporate earnings have fuelled the bounce, as investors continue to believe a resolution is within reach.
In one of the first data points for April, economic activity in the eurozone unexpectedly fell for the first time since 2024. The US number later on Thursday will be closely watched as an early indicator of how increasing oil prices are affecting the economy.
In the UK, gilt yields rose after a recovery in the private sector supported the BoE’s case for higher interest rates. Traders have increased their bets on BoE rate hikes, pricing in two quarter-point hikes this year and a 50% likelihood of a third. That is up from 35 bps at the beginning of the week.
