Headlines:
Markets:
- WTI crude oil up 6% at $86.15, Brent crude oil up almost 5% to $89.30
- USD bid across the board, EUR and NZD lag on the day
- Stocks fall in Europe, DAX down 0.8% while CAC 40 down 1.1%
- US futures slide as well, with S&P 500 futures down 0.6%
- 10-year yields up 2.7 bps to 4.173%
- Gold up 0.2% to $5,090, Silver up 0.2% to $82.36
- Bitcoin down 1.5% to $70,017
The chaos returns as markets are now starting to grow even more anxious about the US-Iran conflict ahead of the weekend.
The big trigger on the session was when Qatar warned of the energy disruption potentially lasting for “weeks to months”. That even if tensions were to thaw today and if the Strait of Hormuz becomes safe to transit again, which isn’t the case. That warning signal was enough to give markets a reality check on the situation and we’re now seeing things kick up a notch ahead of US trading.
Oil prices were tentative earlier on in the day but have now jumped to fresh highs since the conflict started. WTI crude oil in particular is now looking at over 6% gains in hitting $86 a barrel. As mentioned earlier in the week, the moment we really clear $80 is when the market sentiment really shifts and that is exactly what we are seeing. And that’s leading to a more rapid rise with $100 to quickly be in question soon enough.
As oil prices surge, we’re seeing the familiar theme this week follow up on that. The dollar is catching broad bids against the rest of the major currencies with only the loonie holding its own against the greenback.
EUR/USD is now down 0.4% to 1.1560 after hovering around 1.1610 earlier in the day. Meanwhile, GBP/USD is down 0.3% to 1.3315 after keeping around 1.3370 at the start of the session. USD/JPY is staying underpinned as well despite intervention risks, keeping within touching distance of the 158.00 level. USD/CAD is the only one trading flat at 1.3665 as the loonie benefits from higher oil prices.
In the equities space, European indices are continuing to be hammered down to close out the week. The DAX is down 0.8% with the CAC 40 down 1.1%. The former is setting up for a near 7% drop this week with the latter down by a little over 7% already now.
US futures are also seen slumping after holding near flat at the end of Asia trading. S&P 500 futures are now down 0.6% as the jitters creep in. That’s teeing up for a negative week but at least not as bad as what we’re seeing in Europe.
In other markets, precious metals continue to see volatile swings with gold up just 0.2% to $5,090. We saw price move up to a high of $5,144 in Asia but the selling returned as it has all week long in tempering any rebound in gold. The precious metal is now poised for its first weekly loss in five.
As for bonds, we are seeing yields push higher still as traders continue to weigh inflation fears more than safety flows at the moment. 10-year Treasury yields are now up to 4.175%, its highest in five weeks.
Well, we have the US non-farm payrolls coming up to round off the week. But given how markets are distracted by all else that is going on, don’t expect all too much of a strong reaction to the job figures this time around.
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