Oil Holds Above $100 as S&P 500 Slips

Summary

Oil held above $100 a barrel on Friday after fresh exchanges of fire between the US and Iran tested a fragile ceasefire agreement. The S&P 500 closed lower on Thursday as chip stocks including Intel and AMD fell back, while Nvidia and Microsoft gained on continued AI demand. The FTSE 100 dropped sharply as Shell, BP and BAE Systems weakened despite strong earnings updates from some companies. Sterling edged lower against the dollar while gold prices moved higher overnight.

Equities

London’s FTSE 100 closed 1.6% lower on Thursday at 10,276.95, giving back part of the previous session’s gains as oil producers, defence stocks and internationally focused companies came under pressure. The FTSE 250 edged 0.2% higher, helped by strong gains from selected mid-cap names. Sterling strengthened against the dollar during the session as investors reacted to signs that a temporary halt in fighting between the United States and Iran could be nearing agreement.

Shell closed 2.9% lower on Thursday despite reporting its strongest quarterly profit in two years and announcing a dividend increase. BP also fell, ending the session down 2.6% as crude prices slipped back below $100 a barrel. Defence group BAE Systems lost 4.7% after maintaining its full-year guidance, with investors taking profits following a strong run in the shares this year.

InterContinental Hotels Group rose 1.5% after reporting quarterly room revenue ahead of expectations, supported by an improvement in its US business. Autotrader gained 4.1% after Reuters reported that activist investor Palliser Capital had built a stake of up to 2% in the company. Mobile infrastructure group Helios Towers jumped 14.3% after lifting its annual profit forecast, while information and analytics business RELX dropped 6.2% after Morgan Stanley cut its rating to “equal-weight” from “overweight”. RELX shares also traded ex-dividend on Thursday.

In the United States, the S&P 500 closed 0.38% lower at 7,337.11 on Thursday, while the Dow Jones Industrial Average fell 0.63% and the Nasdaq slipped 0.13%. Semiconductor stocks weakened after a strong rally earlier this quarter, with the Philadelphia Semiconductor Index falling 2.7%.

Intel and AMD both closed about 3% lower after recent gains faded. Arm Holdings also fell sharply as concerns over supply availability for its planned AI chip outweighed an upbeat earnings outlook. Nvidia and Microsoft both added almost 2% by the close as demand linked to artificial intelligence continued to support the largest technology companies.

Datadog surged 31% after raising its full-year earnings forecast. CrowdStrike climbed 8% and Palo Alto Networks added 7% following the update from the cloud-monitoring company. Whirlpool slumped 12% after missing first-quarter sales forecasts and suspending its dividend.

Forex & Commodities

The US dollar held firm early on Friday as renewed fighting between the United States and Iran unsettled currency markets and pushed investors back towards traditional safe-haven assets. The dollar index traded at 98.20 after recovering from a two-month low earlier in the week, as traders reassessed expectations for a lasting ceasefire agreement in the Middle East.

Sterling fell to $1.357 early on Friday and remained on track for its first weekly decline since March as investors awaited the outcome of local elections in Britain. Political pressure on Prime Minister Keir Starmer remained in focus ahead of the results. The euro traded little changed at $1.173, while the Australian dollar held at $0.7221 and the New Zealand dollar stood at $0.5943 after both currencies strengthened earlier in the week.

The Japanese yen steadied at 156.9 per dollar during Asian trading after fresh warnings from Tokyo over currency intervention. Japan’s top currency diplomat said authorities remained in daily contact with US officials and faced no restrictions on intervening in foreign exchange markets. Traders continued to watch for any further action from the Bank of Japan or the finance ministry following recent efforts to support the yen.

Spot gold rose early on Friday to $4,724 per ounce and remained on course for a weekly gain as investors monitored developments between Washington and Tehran. Markets reacted after both sides exchanged fire on Thursday despite a month-old ceasefire remaining formally in place. Comments from the Trump administration stating that the ceasefire was still holding helped steady sentiment in precious metals trading.

Oil prices also moved higher on Friday morning after renewed hostilities raised concerns about shipping through the Strait of Hormuz. Brent crude climbed to $101.3 a barrel, while US WTI crude traded at $95.66. Prices had risen more sharply at the market open before easing slightly later in the session.