Oil falls, stocks mixed on US-Iran truce prospects

AFP | London

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Stock markets were mixed while oil prices fell again yesterday on investor optimism that the United States and Iran would reach a deal to extend their ceasefire.

Oil markets have been up and down this week as investors assess the chances of a breakthrough between Washington and Tehran that could potentially resume shipping through the crucial Strait of Hormuz.

Those hopes had been briefly dashed by new US military strikes on Iran on Wednesday, countered by the Revolutionary Guard’s targeting of an American airbase in the region.

By Thursday evening, negotiators had edged towards a deal to extend their fragile ceasefire for 60 days, pending approval from President Donald Trump, US sources told AFP.

The reports sent the S&P 500 index to another record high on Thursday, and Wall Street indices gained further on Friday in morning trading. Europe’s main indices were flat ahead of the weekend. While details of the possible agreement are scarce, “oil traders are taking an optimistic view that the end could be in sight for disruption in the region”, said Derren Nathan, head of equity research at Hargreaves Lansdown. However, “the market’s patience may be tested if a deal is not agreed by early June, and this could have big ramifications for the oil price and the global stock market rally,” said Kathleen Brooks, research director at XTB.

Concerns are also growing that the US Federal Reserve and the European Central Bank may have to tighten interest rates after a run of gloomy indicators.

The Fed’s preferred inflation gauge rose in April to its highest since 2023 and first-quarter US economic growth was revised lower.

European inflation

In Europe, French data showed Friday that its economy contracted 0.1% in the first quarter, while inflation in May accelerated to 2.4%, above the ECB’s target of 2%.Germany meanwhile saw inflation slow in May to 2.6%, though analysts still expect an interest rate hike for the eurozone, possibly at the next ECB meeting on June 11.

Global AI bullishness has driven a historic rally recently, this week pushing the market capitalisations of chipmakers Micron and SK hynix across the $1 trillion threshold.Seoul’s stock market led the charge in Asia on Friday, surging 3.6% while Tokyo’s Nikkei closed at a record high.