Oil extends gains, stocks drop as peace talk hopes fade
Oil prices extended gains Friday and stock markets largely declined as investors worried about a lack of progress in ending the Middle East crisis, with Tehran keeping the Strait of Hormuz closed and the US maintaining a blockade of Iranian ports.
The standoff weighed on equity markets across Asia and Europe, while oil's international benchmark, Brent North Sea crude, was up more than one percent at nearly $107 a barrel.
A week that started with hopes that the United States and Iran would hold fresh peace negotiations was set to end on a negative note, with President Donald Trump saying he had "all the time in the world" despite fears about the war's inflationary impact on the global economy.
With few developments to spur buying of stocks, traders took a cautious approach heading into the weekend and ahead of next week's slew of earnings from Wall Street titans Alphabet, Meta, Microsoft, Amazon and Apple.
Global stock markets have managed to recover following heavy losses at the start of the war, with first-quarter earnings in many cases beating estimates.
Chipmakers in particular continue to outperform thanks to continued optimism over growth in the artificial intelligence sector.
However on Friday, "stocks are down across the board, risk sentiment is off and oil prices are higher", noted Neil Wilson, investor strategist at Saxo UK.
"There's no real progress in ending the war between the US and Iran."
While the US remained at a standstill in negotiations with Iran, Israel and Lebanon have extended a ceasefire by three weeks.
Crude prices have jumped by about on fifth since Monday, having last week tumbled on optimism that a peace agreement would be reached.
With the Strait of Hormuz effectively closed, blocking shipments of oil, the International Energy Agency warned liquefied natural gas (LNG) supplies were likely to remain strained through the end of 2027.
The waterway usually sees one fifth of global oil and LNG supplies pass through it.
German business morale has meanwhile hit the lowest level since the Covid pandemic at the start of the decade, a closely-watched survey on Europe's biggest economy showed Friday.
The Ifo institute confidence barometer dropped to 84.4 in April, down from 86.3 in March, marking its lowest level since May 2020.
"The German economy is being hit hard by the Iran crisis," said Ifo president Clemens Fuest.
"Companies are considerably more pessimistic about the coming months."
A deputy governor of the Bank of England, Sarah Breeden, told the BBC that stock markets around the world were on course for a correction.
"There's a lot of risk out there and yet asset prices are at all-time highs. We expect there will be an adjustment at some point," she added.
- Key figures at 1045 GMT -
Brent North Sea Crude: UP 1.6 percent at $106.76 a barrel
West Texas Intermediate: UP 1.3 percent at $97.10 a barrel
London - FTSE 100: DOWN 0.6 percent at 10,398.48 points
Paris - CAC 40: DOWN 0.9 percent at 8,152.55
Frankfurt - DAX: DOWN 0.3 percent at 24,089.68
Tokyo - Nikkei 225: UP 1.0 percent at 59,716.18 (close)
Hong Kong - Hang Seng Index: UP 0.2 percent at 25,978.07 (close)
Shanghai - Composite: DOWN 0.3 percent at 4,079.90 (close)
New York - Dow Jones: DOWN 0.4 percent at 49,310.32 (close)
Euro/dollar: UP at $1.1701 from $1.1684 on Thursday
Pound/dollar: UP at $1.3488 from $1.3465
Dollar/yen: DOWN at 159.69 yen from 159.72 yen
Euro/pound: DOWN at 86.72 pence from 86.76 pence
burs-bcp/ajb/rl
(P.Tomczyk--DTZ)
Featured