US allows temp Russian oil supplies to stabilise markets

US equities closed lower on Thursday as a sharp rise in oil prices and escalating tensions in the Middle East unsettled investors. The Nasdaq Composite fell 1.8 per cent to 22,311.98, while the S&P 500 declined 1.5 per cent to 6,672.62 and the Dow Jones Industrial Average dropped 1.6 per cent to 46,677.85. Crude prices surged nearly 10 per cent to about $96 a barrel after Iran signalled that the Strait of Hormuz could remain closed, raising fears of a major disruption to global energy supply and adding to concerns that higher inflation could delay interest rate cuts by the Federal Reserve. Bond yields and the US dollar also moved higher ahead of next week’s Fed meeting as markets pushed back expectations for monetary easing.

Energy was the only sector to trade higher as oil prices climbed, while industrials, financials and smaller companies lagged the broader market. Among company movers, shares in Fair Isaac fell 7.6 per cent after the firm priced $1 billion of senior notes due in 2034, making it one of the largest decliners in the S&P 500. In contrast, shares in LyondellBasell Industries rose 9.3 per cent after an upgrade from Citigroup, placing it among the index’s top gainers. Commodity markets were mixed, with gold and silver prices both falling around 2 per cent despite heightened geopolitical uncertainty.

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• Asian equities mostly fell on Friday as the escalating Iran conflict and disruption risks in the Strait of Hormuz kept investors cautious. Nikkei 225 and KOSPI dropped about 1.2 per cent, with Honda Motor sliding over 6 per cent. Chinese markets were steadier, while ASX 200 and Straits Times Index edged higher despite broader regional weakness.

• US equity futures edged higher overnight as oil prices eased after Washington granted temporary waivers allowing some purchases of Russian crude. S&P 500 Futures rose 0.4 per cent, Nasdaq 100 Futures gained 0.3 per cent and Dow Jones Futures added 0.5 per cent. In after hours trading, shares in Adobe fell more than 7 per cent after its chief executive announced plans to step down.

• European equities fell on Thursday as surging oil prices and Middle East tensions stoked inflation concerns. The STOXX 600 dropped 0.6%, with bank shares leading losses down 3.5%, while energy and utilities rose modestly. Gains in select shares, including Leonardo, Daimler Truck, Zalando and K+S, tempered broader market declines slightly.

• The US dollar rose to a more than three-month high, driven by safe-haven demand amid the Iran war, reaching 99.79 on the dollar index and poised for a 0.8% weekly gain. The euro slid to $1.1504, its weakest since November, while the yen weakened to 159.455 per dollar, prompting Japan to consider intervention measures.

• Oil prices rose in Asian trading on Friday, recovering earlier losses as concerns over supply disruptions from the Iran conflict persisted. Brent Crude climbed 0.6 per cent to about $101 a barrel and West Texas Intermediate gained 0.6 per cent. Crude remained on track for weekly gains of roughly 7 to 9 per cent amid fears of prolonged disruption to supplies.

• Mojtaba Khamenei, Iran’s newly appointed supreme leader, said the Strait of Hormuz should remain closed in his first public remarks since succeeding his assassinated father, Ali Khamenei. He praised Iran’s military and warned the conflict could widen. Donald Trump said Khamenei is likely alive but injured and reiterated preventing Iran from obtaining nuclear weapons remains a priority.

• The United States issued a 30-day waiver allowing countries to purchase Russian oil stranded at sea, aiming to stabilise energy markets disrupted by the Iran conflict. Treasury Secretary Scott Bessent described it as short-term, while President Donald Trump pursued additional measures, including strategic reserve releases, Jones Act waivers, and naval escorts, to curb soaring oil prices.

Equities on the move

The following companies experienced moves in their share price driven by analyst ratings, quarterly earnings, or other news:

• Adobe announced that longtime CEO Shantanu Narayen will step down once a successor is appointed, sending shares down over 7% in after-hours trading. The company reported strong quarterly revenue and subscription growth, but investors remain cautious about its AI strategy amid rising competition and disruption in the creative software market.

• Meta Platforms has delayed the release of its new AI model, Avocado, until at least May 2026 after it underperformed compared with rivals, including Google’s Gemini 3.0. While Avocado surpasses Meta’s prior models, the company is considering temporarily licensing Gemini and has committed up to $135 billion to AI development this year globally.

• Samsung Electronics is set for strong earnings growth, with its entire memory chip supply through 2027 likely to sell out, driven by soaring AI demand and limited industry supply. KB Securities forecasts DRAM and NAND prices to surge, raising 2026–2027 operating profit estimates sharply, while AI-driven edge devices are expected to sustain long-term memory demand.

• Shares in Honda Motor fell more than 6 per cent on Friday after the Japanese carmaker warned it expects its first annual loss since listing in the 1950s. The company flagged charges of up to ¥2.5 trillion linked to cancelling three planned US electric vehicle models and weaker operations in China, amid slowing global EV demand and rising competition.

• Stellantis NV is exploring deals with Chinese carmakers to invest in its struggling European operations, focusing its own resources on the Americas. Executives have met with Xiaomi Corp. and Xpeng Inc. to discuss potential stakes in Maserati and access to European production capacity, aiming to strengthen competitiveness and accelerate the region’s operational turnaround.

• Leonardo reported strong 2026 results, with orders of €25 billion, up from €23.8 billion, and revenues of around €21 billion versus €19.5 billion last year. Earnings before interest, taxes and amortisation are expected at €2.03 billion, and a dividend of €0.63 per share was proposed, alongside a strategy focusing on AI, cybersecurity, and digital defence growth.

• Chinese social media giant ByteDance is building cloud infrastructure outside China using Nvidia’s top-end Blackwell chips, deploying at least 500 servers in Malaysia through Aolani Cloud. The TikTok owner aims to expand its AI offerings globally, following earlier use of Nvidia B200 chips in Indonesia, to strengthen its competitive position internationally.

• Amazon.com plans to move its annual Prime Day sale to late June, shifting it into the second quarter and aligning with the back-to-school season. Since 2015, the event has usually been in July. Last year, Prime Day drove $24.1 billion in US online sales, while competitors Walmart and Target expand same-day delivery and digital order fulfilment capabilities.

• TotalEnergies has lost 15% of its oil and gas output due to the U.S.-Israeli war with Iran, shutting offshore fields in the UAE. The outage represents about 10% of upstream cash flow, though higher oil prices and additional production elsewhere are expected to offset losses. Saudi Arabia’s SATORP refinery continues normal operations.

• Fertilizer shares including CF Industries Holdings Inc, Nutrien Ltd, and The Mosaic Company surged as the Middle East conflict threatens spring supply via the Strait of Hormuz. Prices hit multi-year highs amid oil, LNG, and natural gas disruptions, raising concerns over delayed North American planting and supply-chain pressures on global agriculture markets.

• Deutsche Bank shares fell around 6% after the lender highlighted growth in its private credit portfolio to nearly €26 billion in 2025, noting potential indirect credit risks through interconnected portfolios. The disclosure comes amid heightened investor scrutiny of the $2 trillion private credit sector and concerns over underwriting standards and deteriorating credit quality.

• Goldman Sachs has raised its US inflation forecasts and lowered its 2026 growth outlook, citing higher oil prices linked to the war with Iran. Brent crude could average $98 in March–April, sharply above 2025 levels. Inflation may reach 2.9%, GDP growth slow to 2.2%, unemployment peak at 4.6%, and Federal Reserve rate cuts delayed until September amid persistent price pressures.

• S&P Global said it will not make immediate sovereign rating cuts after the Middle East conflict but warned rising oil and gas prices threaten cash-strapped nations. Gulf states are largely insulated, except Bahrain, while Asian importers like India, Thailand, Indonesia, and heavily indebted countries including Pakistan, Bangladesh, and Sri Lanka face heightened financial risks.

• J.P. Morgan flagged HSBC and Standard Chartered as the most exposed major European banks to the Middle East conflict, highlighting potential earnings pressure. The brokerage noted that rising energy costs could strain corporate lending across agriculture, manufacturing, construction, and transport sectors, increasing financial risks in these banks’ portfolios.

• UBS downgraded European banks to “neutral,” citing stretched valuations and crowded positioning, despite solid earnings and capital. UBS maintained a positive stance on European equities, favouring IT, industrials and Germany, while highlighting risks from energy disruption, AI setbacks, and rate rises.

• Piper Sandler upgraded Occidental Petroleum and Murphy Oil to Overweight after raising mid-cycle oil price forecasts due to tighter supply and potential disruptions from the Iran conflict. Price targets were lifted to $66 and $41, respectively, reflecting stronger efficiency, operating leverage, growth prospects, and resilience amid market volatility.

• Citigroup upgraded Dow Inc. and LyondellBasell Industries to Buy, saying supply disruptions linked to Iran and the closure of the Strait of Hormuz could lift global chemical prices. Stronger export demand, margin expansion, and tighter supply chains may significantly benefit North American producers over several quarters amid ongoing geopolitical uncertainty.

• JPMorgan downgraded MercadoLibre to Neutral and cut its price target to $2,100, citing persistent competition in Brazil and near-term margin pressure from growth investments. The brokerage expects 2026 margins to decline, with EBIT below consensus, though earnings could grow strongly 2026–2029 as the company strengthens its e-commerce and fintech presence.

• Piper Sandler initiated coverage of Shopify with an Overweight rating and $165 price target, citing strong growth potential. Drivers include rising revenue from new merchant cohorts, expansion in payments and financial services, and high switching costs for larger enterprise customers, despite the company’s shares trading at a relatively elevated valuation.

• Evercore ISI upgraded Ryanair Holdings to Outperform from In Line, raising its price target to $80, citing a €1 billion net cash position and a 15% pullback from January highs. Despite record jet fuel margins, Ryanair’s 2026–2027 EPS estimates were raised, while most other carriers saw cuts amid sector-wide fuel cost pressures.

Upcoming data and events

Today’s key economic data included UK January GDP up 0.2%, US Q4 real consumer spending slowing to 2.4%, Q4 GDP growth revising down to 1.4%, and January durable goods orders rising 1.2%. Canada’s unemployment rate ticked up to 6.6%. Major earnings releases featured Allianz SE and Erste Group Bank.