Oil falls, European stocks rise, Asia is quiet: market overview

16 May 08:22

Oil dropped by more than 2% in trading on Thursday, as a potential nuclear deal between the US and Iran opened up the prospect of increasing global crude oil supplies. At the same time, US stock indices showed mixed dynamics during volatile trading, "Komersant Ukrainian" reports citing Reuters.

Oil and the Middle East

Brent crude oil futures closed down by more than 2% as US President Donald Trump said during his tour of the Middle East that he was close to reaching a deal with Iran and that Tehran had “to some extent” agreed to the terms.

Ali Shamkhani, an adviser to Iran’s Supreme Leader Ayatollah Ali Khamenei, said in an interview with NBC that the country pledges never to produce nuclear weapons and will get rid of its stockpiles of highly enriched uranium.

Another factor in the negative expectations was Putin’s refusal to meet face-to-face with Zelenskyy in Turkey, which dealt a blow to the prospects for a peaceful breakthrough.

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USA

According to data released on Thursday, producer prices in the US unexpectedly declined in April, and retail sales figures were mixed. Global stocks rose by 0.3%, while emerging market stocks declined slightly.

On Wall Street, the Dow Jones Industrial Average rose by 271.69 points, or 0.65%, to 42,322.75, the S&P 500 rose by 24.35 points, or 0.41%, to 5,916.93, and the Nasdaq Composite fell by 34.49 points, or 0.18%, to 19,112.32.

Yields on benchmark 10-year US Treasury bonds fell 9.1 basis points to 4.437% on fears that Trump’s budget package will add trillions of dollars to the US debt.

Retailer Walmart reported solid first-quarter sales figures, but became the latest to warn of high costs due to Trump’s trade tariffs, and did not provide a profit forecast for the second quarter due to uncertainty.

US Federal Reserve officials believe they need to revisit key elements of their current monetary policy on jobs and inflation, Fed Chairman Jerome Powell said in his opening remarks at a two-day conference.

Europe

European stocks overcame earlier losses to end the day with gains, with the main focus on corporate earnings. Gold prices jumped by more than 1%.

The continental STOXX 600 index was up 0.6%, recovering from early losses led by the energy sector. Most major regional indices were higher. April unemployment figures remained stable.

BNP Paribas economist Paul Hollingsworth noted that the fall in oil prices has exacerbated deflationary pressures already felt in regions such as Europe, where concerns about US tariffs persist.

Data showed that the UK economy grew by 0.2% in March, faster than expected. Industrial production in the 20 countries of the eurozone also grew significantly more than forecast, although overall GDP growth in the first quarter was disappointing.

Yields on benchmark 10-year German Bunds fell by 1.2 basis points to 2.614%.

Asia

Investors received a lot of good news at the beginning of the week, from a truce in the US-China trade war to a number of high-profile investment deals from the Middle East during Trump’s tour of the Gulf.

However, by Thursday, most of the optimism had faded, leaving the broadest index of Asia-Pacific shares, excluding Japan, down 0.15%.

“We’ve had a big party, everybody’s hungover, and now we’re just recovering and waiting for the next big party,”

– said Tony Sikemore, market analyst at IG.

On the currency markets, the dollar struggled to extend the strong gains made earlier in the week, with the dollar index down 0.2% against a basket of major currencies. The euro strengthened slightly.

Movements against the Korean won were particularly volatile for the second day in a row following news that South Korean Deputy Finance Minister Choi Ji-yong met with Robert Caproth, US Assistant Secretary of the Treasury for International Finance, to discuss the dollar/win market on May 5.

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Остафійчук Ярослав
Editor

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