Whalesbook
Geopolitics Drive Oil Prices Higher
Geopolitical tensions and a sharp fall in consumer confidence created mixed signals in global markets Friday, even as strong U.S. jobs data offered support. Oil prices climbed anew amid renewed fighting near the Strait of Hormuz, raising concerns about U.S.-Iran relations. Benchmark Brent crude futures rose by 1% to around $101 a barrel, affecting consumer budgets and business costs globally.
Consumer Confidence Drops to Record Low
A separate survey revealed U.S. consumer sentiment fell to a record low in early May. Higher gasoline prices were cited as a major factor hurting household budgets and spending. This downturn in sentiment suggests economic strain that could counter strong job numbers.
Strong Jobs Data Supports Fed's Steady Approach
Earlier, U.S. employment figures for April beat expectations, with job growth accelerating and the unemployment rate holding steady at 4.3%. This strong labor market supports the Federal Reserve's current policy, keeping interest rates steady for now. Morgan Stanley's Chief Economic Strategist, Ellen Zentner, noted that the data means the Fed is "watching and waiting" for inflation clues, with rate cuts still far off. The report's lack of inflationary threats may also ease talk of possible rate hikes.
Chip Stocks Rise on Apple Deal Hopes
The earlier surge in U.S. stocks, with the S&P 500 and Nasdaq reaching new record highs, was partly driven by chipmakers. Intel shares ([INTC.O]) surged 14% following a Wall Street Journal report detailing a preliminary deal for Apple to make some iPhone chips. This potential deal, if finalized, would significantly boost Intel's manufacturing and highlight continued investment in advanced chips.
Global Markets Show Mixed Performance
In Europe, the picture was weaker, with the European STOXX 600 index falling 0.77%. Asian stocks also fell from recent highs, with MSCI's broadest index of shares outside Japan down 0.8%. Despite the broader dip, chipmakers in Asia saw gains from strong U.S. spending on AI technology. South Korea's KOSPI saw a weekly gain of over 13.5%, its largest since 2008, driven by rallies in Samsung and SK Hynix.