Americas Market Wrap: War Concerns Lift Oil to Highest Level Since May
Key Takeaways
- •WTI crude rose $4.01 to $103.47 a barrel and Brent touched $117 on Friday, Brent's highest level since May, as markets priced in the prospect of US escalation against Iran.
- •President Donald Trump said shortly before the close that the US may undertake a 'little Epic Fury,' consistent with reports of a potential short-term bombing campaign targeting Iranian nuclear sites and some infrastructure, with attention turning to possible Iranian retaliation.
- •Friday's data was mixed, as University of Michigan October consumer sentiment came in at 48.0 versus 46.3 expected, the US flash services PMI registered 57.9, Canada's August retail sales rose 1.2% against a 1.3% forecast, and the US oil rig count edged up one to 460.
- •Closing markets reflected the cross-currents, with the S&P 500 down 0.5%, gold falling $24 to $3,999, and US 10-year Treasury yields rising 4.6 basis points to 5.00%.
- •Meta fell another 1% after Thursday's 7% decline as it prepares to launch a new class of shares, while telecom stocks declined on signs that Elon Musk may move Starlink into terrestrial cell tower infrastructure.
Crude oil surged on Friday, with WTI rising $4.01 to $103.47 a barrel and Brent touching $117, its highest level since May, as investors weighed the prospect of a US escalation against Iran heading into the weekend. Energy moves of this scale reach beyond trading screens, since crude is the principal input behind gasoline, diesel, and jet fuel prices.
At a rally shortly before the market close, President Donald Trump said the United States may do a "little Epic Fury," comments that align with reports of a potential short-term bombing campaign targeting nuclear sites and some infrastructure. Markets will be watching closely what happens after the close, with the focus then turning to potential retaliation from Iran.
Friday's data flow painted a mixed picture:
- Baker Hughes reported the US oil rig count rose by one to 460, while total rigs were unchanged at 603, a weekly tally followed as a rough gauge of future US production.
- The University of Michigan's October consumer sentiment reading, a monthly gauge of how households view their finances and the broader economy, came in at 48.0, above the 46.3 expected.
- Canada's August retail sales increased 1.2%, slightly below the 1.3% forecast.
- The US S&P Global flash October services PMI registered 57.9, marginally under the 58.0 estimate but still well above the 50 line that separates expansion from contraction in this preliminary, survey-based gauge.
- A report indicated the US is expected to remove 50% tariffs on some Canadian products as soon as today.
Closing prices reflected the heavy cross-currents in markets. Gold fell $24 to $3,999. The S&P 500 declined 0.5%. US 10-year Treasury yields rose 4.6 basis points to 5.00%, the benchmark rate that serves as a reference for everything from mortgage rates to corporate borrowing costs. The Australian dollar led major currencies while the Swiss franc lagged.
The jump in oil lifted Treasury yields and weighed on gold, but energy was not the only focus. The euro continued to be dragged down by protests in France and elsewhere, with markets anticipating political change and the likelihood of more government spending to tamp down unrest and preserve the status quo.
Meanwhile, the AI trade remained in flux, with increasing attention on where the money to finance it will come from. The answer appears to be equity markets, but doubts persist about whether they can sustain that kind of capital raising, and the bond market has already shuddered.
Meta fell another 1% after Thursday's 7% decline as it readies itself to launch a new class of shares. Telecommunications names were also among the losers on signs that Elon Musk is moving Starlink to earth, where he would install cell phone towers or buy space on existing ones.
