Oil prices dropped more than 2% on Thursday as hopes grew for a potential U.S.-Iran nuclear agreement, which could increase the global supply of crude. At the same time, Wall Street showed mixed results in volatile trading.
European stocks recovered from earlier losses to finish higher, driven by strong corporate earnings reports. Meanwhile, gold prices surged by over 1%.
In the U.S., producer prices unexpectedly fell in April, while retail sales results were mixed, according to data released Thursday.
Global equities saw a modest rise of 0.3%, although emerging market stocks weakened slightly.
Federal Reserve Chair Jerome Powell, speaking at a two-day conference, said the Fed needs to rethink its current strategy on jobs and inflation to guide monetary policy more effectively.
On the geopolitical front, Russian President Vladimir Putin declined a direct meeting with Ukrainian President Volodymyr Zelenskiy in Turkey, dampening hopes for a breakthrough in peace talks.
Oil markets reacted strongly to statements from U.S. President Donald Trump, who is currently touring the Middle East. Trump said he was close to securing a deal with Iran, noting that Tehran had “sort of” agreed to the terms.
Supporting this, Ali Shamkhani, an adviser to Iran’s Supreme Leader, said in an NBC interview that Iran would commit to never making nuclear weapons and would eliminate its stockpiles of highly enriched uranium.
Paul Hollingsworth, an economist at BNP Paribas, said the drop in oil prices added to deflationary pressures already affecting regions like Europe, where concerns about U.S. tariffs persist. “Everyone is finding it difficult to navigate the volatility in the announcements,” he said.
In Europe, the STOXX 600 index rose 0.6%, bouncing back from earlier losses mainly in the energy sector. Most major regional indexes ended the day higher. Jobless figures for April remained steady.
On Wall Street, the Dow Jones Industrial Average gained 271.69 points (0.65%) to 42,322.75. The S&P 500 rose 24.35 points (0.41%) to 5,916.93, while the Nasdaq Composite slipped 34.49 points (0.18%) to 19,112.32.
Retail giant Walmart reported strong first-quarter sales but warned about rising costs from Trump’s trade tariffs. The company did not provide profit guidance for the second quarter due to ongoing uncertainties.
Powell warned, “We may be entering a period of more frequent, and potentially more persistent, supply shocks.”
In the U.K., the economy grew faster than expected by 0.2% in March. Industrial production in the eurozone’s 20 countries also rose more than forecast, although overall GDP growth in the first quarter was disappointing.
German 10-year government bond yields fell by 1.2 basis points to 2.614%, while U.S. 10-year Treasury yields dropped 9.1 basis points to 4.437% amid concerns that Trump’s budget plan could add trillions to the U.S. national debt.
Earlier in the week, investors were buoyed by positive news such as a truce in the U.S.-China trade war and major investment deals from the Middle East during Trump’s Gulf tour. However, by Thursday, much of this optimism had faded. MSCI’s broadest index of Asia-Pacific shares, excluding Japan, fell 0.15%.
Tony Sycamore, a market analyst at IG, commented, “We’ve had a huge party, everyone’s hung over, and now we’re just recuperating and waiting for the next big party.”
In currency markets, the U.S. dollar struggled to extend gains from earlier in the week, with the dollar index down 0.2% against a basket of major currencies. The euro edged slightly higher.
The Korean won experienced particularly volatile moves for a second day, following a meeting between South Korea’s deputy finance minister Choi Ji-young and Robert Kaproth, U.S. Treasury assistant secretary for international finance, to discuss the dollar/won market on May 5.
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