Mixed day for global equities as oil prices retreat

Global oil prices retreated Friday, with Brent crude falling back under $97 a barrel after surging past the $100 mark the previous day. The decline offered some relief to US and European stock markets, which had experienced volatility due to escalating Middle East tensions.

Brent crude dropped about four percent to under $97 a barrel, following a seven percent surge on Thursday. West Texas Intermediate, the key US contract, also declined more than three percent after gaining over six percent the day before. These sharp increases were initially triggered by Houthi rebels in Yemen striking oil tankers in the Red Sea, raising fears of a new front in the Middle East conflict.

However, markets found some reassurance as ships continued to transit the Bab al-Mandeb Strait, a critical passage into the Red Sea. A Houthi spokesman explicitly stated that traffic was not being blocked through the strait. Giovanni Staunovo, a commodities analyst at UBS, noted that the continued passage of ships, including those carrying Saudi crude, reduced the immediate risk of a severely tightened oil market.

On Wall Street, the Dow and S&P 500 saw gains, while the Nasdaq retreated again, with semiconductor stocks facing renewed selling pressure. Analysts cited market uncertainty stemming from unpredictable geopolitical events and the Federal Reserve's potential response to rising oil prices. Expectations for a US interest rate hike at the upcoming Federal Reserve meeting have increased significantly.

Looking ahead, the schedule includes a heavy calendar of quarterly earnings reports from major tech companies like Amazon and Apple, as well as industrial giants such as Boeing and Ford. Meanwhile, European stock markets advanced on Friday, partly due to tech stocks having a less dominant role compared to the US market.

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Ships with Saudi crude are still crossing ... so for now, it is not a full blockade, reducing a bit the risk of an even tighter oil market.