Brent jumps to $123 – Moneyweb

Oil jumped to the highest level in almost four years due to the failure to make any progress toward reopening the Strait of Hormuz, weighing on risk sentiment despite a boost from megacap tech earnings.

Brent climbed as much as 4.3% to $123.11 a barrel, heading for a ninth day of gains that would be the longest winning streak since May 2022. The commodity has surged more than 100% this year, with bulk of that advance coming after the US-Israel attack on Iran in late February. Oil extended gains Thursday after US President Donald Trump told Axios that he will not lift a naval blockade on Iranian ports until he secures a nuclear agreement with Tehran.

The report weighed on sentiment with stocks paring their tech-earnings fueled advance. Futures contracts for the Nasdaq 100 Index trimmed gains to be up 0.3%, down from as much as 1%, after earnings of megacap companies such as Alphabet Inc. and Amazon.com Inc. sparked optimism. MSCI’s Asia Pacific shares index fell 1%.

Bonds slid as the surge in oil and a hawkish hold by the Federal Reserve sapped demand for fixed-income assets. Treasury 10-year futures dropped for a fourth day, while cash 10-year yields held near the highest since July. Yields on Japan’s 10-year notes rose to the highest since 1997.

From surging oil prices driven by the Iran war to a divided Fed holding rates steady and megacap tech earnings, traders are grappling with a barrage of whipsawing headlines. With oil climbing to four-year highs and bond yields rising, the backdrop tests a global equity rally that has erased war-related losses and pushed US markets to new highs, driven by strong tech earnings.

“As the MAG7 profit results roll out, the money printing of their businesses and profitability stands in stark contrast to the ever-climbing US debt and yield story,” said Martin Whetton, head of financial markets strategy at Westpac Banking Corp.

There’s more for traders to parse Thursday, with the European Central Bank and the Bank of England set to announce policy decisions, followed by US economic data.

Apple is the marquee earnings event on Thursday after a frenzied Wednesday offered a glimpse at how some of the world’s biggest tech companies are doing in artificial intelligence. The upshot is that Alphabet’s Google is seeing a clear payoff from its AI spending, while Meta is lagging behind.

Alphabet rose 7% in post-market trading, while Meta Platforms Inc. dropped 7%. Amazon.com Inc. shares climbed 2.7%, while Microsoft Corp. edged up 0.3%. Elsewhere, Anthropic PBC began weighing a fresh funding round that would value the AI developer at more than $900 billion, according to people familiar with the matter, potentially leapfrogging its longtime rival OpenAI as the world’s most valuable AI startup.

In Asia too, the AI-fueled rally is masking signs of strain, with gains in tech names overshadowing the impact of the US-Iran war on the broader market.

Elsewhere, the yen was steady on Thursday after the currency extended its slide beyond 160 per dollar to its weakest level this year, fueling risk that Japanese officials may step into the market to offer support.

Gold edged up 0.5% to $4,570 an ounce, while Bitcoin advanced to about $75,750. Japanese stock gauges fell more than 1% as they reopened after a holiday. Even so, the Kospi Index in South Korea was set for its best month since 1998 and the Taiex in Taiwan the best since 2001.

What Bloomberg Strategists Say…

“Asian equities remain caught between two powerful, opposing forces: a resilient global capex cycle and a worsening inflationary backdrop that threatens broader corporate margins.” – David Savage, Macro Squawk.

A market-wide shift toward expecting a longer conflict has sharpened focus on US supplies, now all-the-more critical to offset disruptions to Middle Eastern flows. US government data published Wednesday show that domestic oil stockpiles are declining as American exports surge to record highs.

“The biggest concern is the rise in oil,” said Hiroyuki Ueno, chief strategist at Sumitomo Mitsui Trust. “People are starting to really worry about inflation. It seems like the US is resistant to Iran’s latest deal proposal, and the fate of the Strait of Hormuz remains unclear.”

The Fed left rates unchanged Wednesday, but revealed a deepening division over the outlook for policy. Traders have all but abandoned wagers on a rate cut this year and have begun pricing in the chances of a hike in 2027.

Jerome Powell’s press conference was his last at the helm of the central bank after the Justice Department dropped a controversial criminal investigation into the Fed, clearing the way for the Senate confirmation of Kevin Warsh as the next chair. Powell said he’ll remain at the central bank as a governor.

The latest gathering revealed a deepening division. Cleveland Fed President Beth Hammack, alongside Minneapolis’ Neel Kashkari and Dallas’ Lorie Logan, “supported maintaining the target range for the federal funds rate but did not support inclusion of an easing bias in the statement at this time.” Governor Stephen Miran dissented in favour of a cut.

“The three dissents on the statement’s language point to a marginally more hawkish tilt, as some officials prepare for the possibility that inflation remains higher for longer,” said Angelo Kourkafas at Edward Jones. “We expect the Fed to remain firmly on hold in the months ahead.”

Some of the main moves in markets:

Stocks

• S&P 500 futures rose 0.1% as of 12:48 p.m. Tokyo time
• Nikkei 225 futures (OSE) fell 1.2%
• Japan’s Topix fell 1.5%
• Australia’s S&P/ASX 200 fell 0.2%
• Hong Kong’s Hang Seng fell 1.3%
• The Shanghai Composite was little changed
• Euro Stoxx 50 futures fell 0.5%

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro was little changed at $1.1666
• The Japanese yen was little changed at 160.40 per dollar
• The offshore yuan was little changed at 6.8422 per dollar

Cryptocurrencies

• Bitcoin rose 0.3% to $75,887.13
• Ether rose 0.6% to $2,253.49

Bonds

• The yield on 10-year Treasuries was little changed at 4.42%
• Japan’s 10-year yield advanced five basis points to 2.515%
• Australia’s 10-year yield advanced eight basis points to 5.07%

Commodities

• West Texas Intermediate crude rose 2.3% to $109.32 a barrel
• Spot gold rose 0.3% to $4,560.47 an ounce
• This story was produced with the assistance of Bloomberg Automation.

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