GLOBAL equity markets fell while oil prices rose yesterday as hopes of a quick end to the Middle East conflict faded as hostilities flared again.
On Wall Street, all three indexes pulled back from recent record highs with technology and financial shares driving losses while energy stocks were leading gains. The Dow Jones Industrial Average fell 0.75 per cent, the S&P 500 fell 0.36pc, and the Nasdaq Composite fell 0.42pc. The pan-European STOXX 600 index fell 0.59pc. MSCI’s gauge of stocks across the globe fell 0.32pc.
“The broad market and the tech sector have led this strong, strong rally for the past several sessions and today’s taking a breather,” said Wasif Latif, chief investment officer at Sarmaya Partners.
“The headline coming out of the Middle East with the Iran war continuing to escalate, deescalate, escalate, and then deescalate again. That’s the reason for the market selloff today.”
Oil prices crept back towards the $100 mark, with global benchmark Brent crude up 1.8pc to $97.72 a barrel.
Investor euphoria over artificial intelligence continues to underpin markets. In Asia, stock indexes climbed to record highs in Japan and Taiwan. Shares in Marvell Technology were up 6pc, extending gains from a record high in the prior session after Nvidia boss Jensen Huang called the chipmaker the next trillion-dollar company.
SpaceX – which is largely focused on AI – plans to raise $75 billion in a blockbuster initial public offering, according to a source familiar with the matter.
“Our view continues to be that this strong run up in semiconductors and data centre demand is a lot of pulling forward of future demand and consumption, and that’s helping the economy,” Latif added.
Currency traders were on edge, however, after the dollar rose against the Japanese yen to the 160 level at which the market tends to become nervous about intervention from authorities in Tokyo. The Japanese yen weakened 0.07pc against the greenback to 159.97 per dollar. The fall in the yen prompted warnings from the finance minister yesterday. The euro down 0.31pc against the greenback at $1.1596. The dollar index, which tracks the currency against its peers, rose 0.21pc to 99.50.
Markets, which had expected rate cuts before the Iran war, have priced in about 18 basis points of US rate increases this year. A hike in Europe next week is all but fully priced in following data showing inflation accelerated last month, while traders predict about a 75pc chance of a June rise in Japan. US 10-year Treasury yields rose 2.8 basis points to 4.483pc. Data showed US private payrolls increased more than expected in May. More comprehensive official jobs numbers are due tomorrow. Spot gold fell 0.81pc to $4,449.44 an ounce.
Meanwhile, most major Gulf stock markets fell yesterday as hostilities flared after US-Iran peace talks stalled.
Saudi Arabia’s benchmark index fell 0.1 per cent, hit by a 2.9pc slide in Banque Saudi Fransi and a 0.4pc drop in oil major Saudi Aramco.
A survey showed the kingdom’s non-oil private sector grew at its fastest pace in three months in May, supported by stronger domestic demand and stabilising supply chains, though business optimism remained subdued amid the conflict in the region.
Gulf stock markets weakened as investors turned cautious, though hopes for a diplomatic breakthrough could limit further losses, said Joseph Dahrieh, managing director at Tickmill. He added that solid domestic economic conditions may help support confidence.
Dubai’s main share index dropped 0.8pc, with blue-chip developer Emaar Properties and sharia-compliant lender Dubai Islamic Bank both retreating 2.4pc. In Abu Dhabi, the index was down 0.4pc. The Qatari index eased 0.1pc, with petrochemicals maker Industries Qatar dropping 1.4pc.
Outside the Gulf, Egypt’s blue-chip index fell 0.7pc.
&uuid=(email))