Crude oil rises to $115 with stocks mixed on earnings, AI

Oil prices traded at five-month highs on Friday, with benchmark crude contract Brent North Sea rising above $115 a barrel, as the Middle East conflict raged on. Global markets were contending “with concerns around surging oil prices and the sustainability of AI spending”, noted AJ Bell head of financial analysis Danni Hewson. “Oil is at five-month highs amid speculation there may be renewed US-Israeli strikes after next month’s US midterm elections.

“Escalating tensions in Ukraine and the prospect of increased energy demand as the northern hemisphere heads into the winter months are only adding to the upwards pressure on oil and gas prices,” Hewson added. Benchmark international oil contract Brent crude for December delivery rose as high as $115.45. Wall Street’s main indices slid at the start of trading, with the blue-chip Dow sinking one percent.

“The ongoing agitation of the oil market has contributed to the lack of a buy-the-dip impulse” that has often helped Wall Street stocks avoid pulling lower this year. High oil prices also “keep inflation concerns and rate hike concerns on the front burner”, he added. Higher borrowing costs would make it more expensive for companies to borrow, which could pull the rug out from under breakneck development of AI that is being financed by debt and has underpinned the rise in equity markets this year.

Stock markets mostly dropped in Europe following some poorly-received earnings from Gucci parent Kering and Swedish group Volvo Cars. Asian equity indices closed out the week mixed as technology firms managed to claw back some of the week’s hefty losses. Rising energy prices have influenced movements across stock markets in recent days along with developments in the AI sector.

Facebook parent Meta and chip equipment maker Lam Research saw their share prices dive this week despite above-forecast earnings for the pair. “Strong results are no longer enough if the outlook fails to match an already demanding valuation,” noted Fawad Razaqzada, a markets analyst at traders FOREX.com. “Investors are becoming much less forgiving.” Non-AI companies have also seen their share prices slump this week.

Kering shed more than 16 percent in Paris afternoon deals on Friday after the French luxury group published results that failed to reassure investors about a turnaround at its key Gucci brand. Volvo Cars meanwhile plunged more than 26 percent after it said US tariffs and strong competition from local brands in China pushed it into a third-quarter loss.

In response, the company announced a new five-billion-kronor savings plan it said would lead to about 2,000 job cuts in Sweden and 500 more globally. Aside from energy markets, AI and earnings next week, focus will fall firmly on interest-rate meetings for the US Federal Reserve and European Central Bank, as well as an update on US economic growth data. – Key figures at around 1330 GMT – Brent North Sea crude: UP 1.9 percent at $115.29 per barrel West Texas Intermediate: UP 2.3 percent at $101.76 per barrel New York – Dow: DOWN 1.0 percent at 52,362.08 points New York – S&P 500: DOWN 0.5 percent at 7,628.15 New York – Nasdaq Composite: DOWN 0.4 percent at 25,914.05 London – FTSE 100: DOWN 0.6 percent at 10,666.06 Paris – CAC 40: DOWN 0.9 percent at 7,739.94 Frankfurt – DAX: DOWN 1.1 percent at 25,088.15 Tokyo – Nikkei 225: DOWN 0.3 percent at 62,693.16 (close) Hong Kong – Hang Seng Index: UP 0.7 percent at 23,093.37 (close) Shanghai – Composite: UP 0.9 percent at 3,690.48 (close) Euro/dollar: DOWN at $1.1198 from $1.1217 on Thursday Pound/dollar: DOWN at $1.3374 from $1.3399 Dollar/yen: DOWN at 156.44 yen from 156.86 yen Euro/pound: DOWN at 83.76 pence from 83.78 pence AFP