Global stock markets experienced mixed results on Friday as oil prices retreated from recent highs. The main international oil contract, Brent North Sea, fell back under $100 a barrel after surging past this key milestone the previous day due to escalating Middle East strikes. This retreat helped stabilize US and European stock markets.
Brent dropped about four percent to under $97 a barrel, having soared seven percent on Thursday. Similarly, the key US contract, West Texas Intermediate, declined more than three percent after gaining over six percent the day before. These significant jumps followed attacks by Yemen's Houthi rebels on oil tankers in the Red Sea, which raised concerns about a new front in the Middle East conflict.
Despite the United States launching fresh strikes on Iran on Friday, there was market relief as some ships were still able to pass through the Bab al-Mandeb Strait, a crucial passage into the Red Sea. A Houthi spokesman confirmed that the rebels were not blocking traffic through the strategic strait, reducing immediate concerns about a full blockade.
On Wall Street, the Dow and S&P 500 rose, while the Nasdaq retreated, with semiconductor shares suffering another round of selling. Analysts noted that markets are currently buffeted by uncertainty over unpredictable geopolitical events and questions about how the Federal Reserve will respond to the latest jump in oil prices.
Expectations that the US Federal Reserve could hike interest rates at its meeting next week have risen from 13 percent last week to 30 percent currently. The CME's FedWatch Tool indicates a 90 percent probability of at least one 25-basis point rate hike before year-end. Next week also brings a heavy calendar of quarterly results from tech giants like Amazon and Apple, as well as major industrial players including Boeing and Ford.
