Headlines

• Middle East tensions remain heightened with the weekend drawing closer
• Oil prices come off the boil in final stretch of the week
• Oil Analysis Today: Tactical Bearish Bias Takes Hold Near $90 Support Shelf as Markets Weigh ECB Pause and Iran Tensions
• ECB's Kocher: Don't see evidence of second-round effects but will act if inflation outlook deteriorates
• ECB policymaker Nagel says should not pre-commit to any rate move before September meeting
• French business activity stabilises in July amid strong rebound in the services economy
• Germany July flash manufacturing PMI 52.2 vs 50.5 expected
• Euro area business activity rises for first time in four months as demand conditions rebound
• UK July flash services PMI 51.8 vs 49.4 expected
• UK retail sales rose unexpectedly in June amid summer heat and World Cup fever
• German household sentiment eases a little more heading into August

Markets

• WTI crude down 2.7% to $89.65
• European stocks slightly higher; S&P 500 futures up 0.2%
• AUD leads, USD and CHF lag on the day
• 10-year Treasury yields down 2 bps to 4.68%
• Gold up 0.3% to $4,059
• Bitcoin down 0.2% to $64,985

The European session was relatively quiet, with markets taking a modest breather in the final stretch of the week.

Middle East tensions remained elevated, but risk aversion eased somewhat on the day as oil prices pulled back, at least for now. WTI crude was down 2.7% at $89.65, while Brent crude fell 2.6% to $98.05.

In the context of the broader weekly move, the declines were limited. WTI crude was still on track for a 9% gain for the week, while Brent crude was poised to end the week more than 11% higher at current levels.

The oil move remained the main cross-asset reference point, with traders balancing the pullback against the unresolved geopolitical backdrop heading into the weekend. That kept the session more about position adjustment than a clear shift in the broader weekly narrative.

As oil prices retreated, bond yields also moved down from recent highs. Germany’s 10-year yield slipped from 3.20% to 3.18%, while the US 10-year Treasury yield fell from 4.71% to 4.68% on the day.

The rates backdrop was also framed by euro area data and central bank comments. Flash PMI releases showed euro area business activity rising for the first time in four months, with Germany’s manufacturing PMI beating expectations and French activity stabilising on a stronger services performance. From the ECB side, Kocher said he did not see evidence of second-round effects but would act if the inflation outlook deteriorates, while Nagel said policymakers should not pre-commit to any rate move before the September meeting.

The dollar was marginally lower against major currencies as the broader risk tone found some relief. EUR/USD rose 0.1% to 1.1385, while USD/JPY declined 0.1% but remained near 40-year highs at 163.75.

Equity markets in Europe posted slight gains. Germany’s DAX was up 0.7%, and France’s CAC 40 gained 0.3%. US futures were also steadier, with S&P 500 futures rising 0.2% and Nasdaq futures up 0.1%, though the moves offered little direction after heavy selling on Wall Street in the previous session.

In the UK, the data flow was firmer as the July flash services PMI came in at 51.8 versus 49.4 expected, while June retail sales rose unexpectedly amid summer heat and World Cup fever. German household sentiment, however, eased a little more heading into August.

In precious metals, gold recovered some ground, rising 0.3% to $4,059.

Overall, market activity pointed to a partial recovery and a light pause as the weekend approached, with oil, yields, and incoming activity data remaining the key reference points for the next session.