Oil Surges, Stocks Split: Markets Watch Middle East Crisis And Earnings

Oil prices remained steady on Friday after sharp swings, as investors closely watched the Middle East and awaited further developments. Brent crude traded near $111 a barrel after soaring above $126 earlier this week. Global stock markets were mixed in holiday-thinned trading, with Tokyo rising and London slipping.

Oil prices steadied on Friday after a week of dramatic swings, while global stock markets moved in different directions as investors weighed Middle East tensions, company earnings and central bank signals. Trading was quieter than usual because many major financial markets were closed for the May 1 public holiday.

Holiday closures reduce trading activity

Several important markets across Europe and Asia did not open on Friday. These included France, Germany, Hong Kong and mainland China.

With fewer traders active, price movements in open markets were more noticeable than usual. Tokyo was one of the major markets that remained open and finished the day higher.

London, however, slipped lower.

London dragged down by NatWest

Britain's FTSE 100 index fell 0.6 percent to 10,313.70. The decline was partly caused by weakness in banking shares.

NatWest reported a rise in first-quarter profit, but investors focused on its warning that economic conditions were becoming more difficult.

That cautious outlook weighed on the broader London market.

Oil steadies after huge swings

Brent crude, the main international oil benchmark, rose 0.7 percent to $111.20 a barrel. US benchmark West Texas Intermediate gained 0.3 percent to $105.39.

Oil has been extremely volatile in recent weeks. After falling sharply earlier in April when hopes of a US-Iran ceasefire emerged, prices have surged again.

On Thursday, Brent briefly jumped above $126 a barrel, its highest level in four years.

Middle East fears remain strong

Investors are closely watching the conflict involving Iran. A report from Axios said US President Donald Trump would receive a briefing on possible new military strikes.

That increased fears that the conflict could worsen further. Markets are also worried about the Strait of Hormuz, one of the world's most important shipping routes.

Around one-fifth of global oil supplies normally pass through this narrow waterway.

Any prolonged disruption could seriously affect energy supplies worldwide.

Higher oil could hurt the economy

Matt Britzman, senior equity analyst at Hargreaves Lansdown, warned that sustained high oil prices could eventually damage the wider economy.

He said that if oil remains above $100 a barrel for a long period, the impact would become harder for businesses and consumers to ignore.

For now, however, strong company earnings are helping investors stay positive.

Wall Street continues to climb

US markets ended strongly on Thursday. Both the S&P 500 and the Nasdaq closed at fresh record highs. Investors have been encouraged by solid corporate earnings and the continued strength of the American economy.

Russ Mould, investment director at AJ Bell, said the latest US earnings season has been robust. That strength has helped global markets avoid larger losses despite rising geopolitical risks.

Alphabet and Apple impress investors

Technology shares have been a major support for Wall Street. Google parent Alphabet surged 10 percent after reporting better-than-expected profits and strong revenue across its businesses.

Apple also delivered strong quarterly results after markets closed on Thursday.

Its earnings beat forecasts, helped by solid iPhone sales.

These results reassured investors that large technology companies remain in strong financial health.

Central banks stay cautious

The recent rise in oil prices has renewed concerns about inflation. Higher energy costs can make goods and services more expensive.

Because of this uncertainty, several major central banks kept interest rates unchanged this week. The US Federal Reserve, the Bank of Japan, the European Central Bank and the Bank of England all left borrowing costs steady.

However, both the ECB and the Bank of England hinted that rate increases could still come later if inflation remains stubborn.

Yen weakens after recent surge

In currency markets, the Japanese yen slipped slightly against the US dollar. The dollar traded at 156.50 yen, compared with 156.60 yen on Thursday.

The yen had strengthened sharply a day earlier amid speculation that Japanese authorities had intervened to support their currency.

Japanese officials have recently warned that they are prepared to act against excessive currency moves.

Market snapshot

Tokyo's Nikkei 225 rose 0.4 percent to close at 59,513.12. London's FTSE 100 fell 0.6 percent. In the United States, the Dow Jones had climbed 1.6 percent on Thursday.

The euro and pound both edged slightly higher against the US dollar.

Investors remain cautious

Markets are likely to stay sensitive in the coming days. Any fresh developments in the Middle East could quickly move oil prices again.

At the same time, investors will continue watching company earnings and central bank comments.

(With AFP inputs)