Brent Slips as Trump Waives Some Russia Sanctions

Summary

Brent slipped after President Trump waived some Russia-related sanctions, though he and Secretary of State Marco Rubio signalled the decision remained under review. Lower oil helped Treasuries extend their rally and nudged Wall Street futures higher. South Korea’s KOSPI fell again after shedding 14% last week amid AI jitters. China’s yuan firmed to its strongest since July 2022, while tanker rates hit records amid Hormuz attacks, including a tanker striking a mine.

Equities

The FTSE 100 rose 0.38% to 10,881.90 on Friday, ending the week 3.1% higher in its biggest weekly gain since early April. The FTSE 250 added 0.45% on Friday.

British American Tobacco rose 2.1% on Friday and Diageo gained 1.9%, while defence stocks extended their recent run, with Babcock International up 3.6% and BAE Systems up 2.6%. Over the week, beverages shares climbed 7.8% and medical equipment and services stocks gained 6.9%.

THG surged 30% over the week, its best weekly performance in six months, after the e-commerce group raised its annual adjusted core profit forecast on Thursday.

Housebuilders jumped more than 6% over the week after Chancellor John Healey reaffirmed his commitment to fiscal discipline on Thursday. Banks ended little changed on Friday after recovering from early losses triggered by a report that Healey is likely to tax lenders in the Budget.

Bank of England Governor Andrew Bailey said signs of second-round inflation effects were limited, ahead of UK inflation data next week. Traders are pricing in four rate rises from the Bank over the next 12 months.

The S&P 500 fell 1.22% to 7,649.71 in late trading on Friday, the Nasdaq dropped 2.19% to 26,128.13 and the Dow Jones Industrial Average lost 0.55% to 51,891.77. The S&P 500 was heading for its steepest weekly loss since January, while the Nasdaq was on course for a weekly fall of more than 4%, its sharpest since June.

CoreWeave slumped 12% on Friday, taking its loss over five sessions to about 25%, as yields on its bonds rose above 15% this week. Broadcom fell 3.6% and the Philadelphia semiconductor index dropped 2.5%, heading for an eighth straight daily decline.

Tesla fell 2.5% on Friday after unveiling a redesigned Roadster powered by rocket-style thrusters, developed with SpaceX. Netflix lost 2.9% after appointing former Disney executive Peter Rice as chief content officer on Thursday.

Forex & Commodities

The US dollar was steady early this morning at 101.8 against a basket of currencies, edging up from near its lowest level of the month as violent protests in France weighed on the euro. The euro was down at $1.123, after President Emmanuel Macron condemned the violence that broke out on the sidelines of cost-of-living protests over the weekend. The British pound was steady at $1.333, while the Australian dollar was up at $0.6975 and the New Zealand dollar was flat at $0.5655.

Against the yen, the dollar was flat early this morning at 158.1 yen after Bank of Japan Governor Kazuo Ueda said underlying inflation is quite close to the central bank’s 2% target. Markets are pricing an 87% probability that the Federal Reserve will leave rates on hold at its meeting beginning on October 28, little changed from Friday. The European Central Bank meets the following day, and the International Monetary Fund said on Friday that the ECB is likely to raise rates by a quarter point at least once more this year.

US import prices rose more than expected in September, lifted by higher energy costs. US personal consumption expenditures data, the Fed’s preferred inflation measure, is due next week.

Spot gold rose 0.4% to $4,182 an ounce early this morning, supported by lower oil prices. Traders were pricing a 13% chance of a Fed rate hike this month and an 89% probability of a December increase. Silver was up at $57.73, platinum rose to $1,648 and palladium climbed to $1,131.

Oil prices fell early this morning from a five-month high after President Trump signed an executive order on Friday waiving sanctions and tariffs on Russia, which could lead to more Russian fuel exports. Brent crude was down 2.1% at $107.6 a barrel, having briefly touched $110 on Friday for the first time since May. WTI fell to $99.46 after closing at its highest since September 17 on Friday.

Secretary of State Marco Rubio said the president will take up to 60 days to assess the economic impact of the sanctions and tariffs. Gulf crude flows fell to around 8.5 million barrels a day last week from more than 20 million the week before as attacks on shipping intensified.