Stocks rise and oil falls after Trump rules out pre-midterm Iran attack
World equity markets inched higher and oil prices slipped on Friday after President Donald Trump said the United States would not attack Iran before the upcoming midterm elections, while investors remained cautious on valuations and borrowing costs.
World equity markets edged up on Friday as oil prices fell following President Donald Trump’s statement that the United States would not launch an attack on Iran before next month’s midterm elections, reducing immediate concerns about energy supplies.
Investors stayed wary, balancing a fresh wave of fundraising by technology firms against persistently high borrowing costs in major economies. Chip stocks stayed in focus after Thursday’s pressure linked to OpenAI, with the ChatGPT owner reporting annualised September revenue of about $50 billion, below earlier expectations, while Bloomberg projected potential year-end revenue of $70 billion.
"Investors are becoming more discriminating about AI valuations while renewed demand for government bonds is emerging at elevated yields," said Florian Ielpo, head of macro at Lombard Odier.
U.S. Treasury yields rose modestly after a dip on Thursday when demand for 30-year bonds was strong. In Europe, government borrowing costs generally fell after a sharp sell-off driven by inflation worries and concerns over France’s fiscal outlook. The spread between 10-year French debt and German Bunds narrowed by about five basis points over the week, though it remained near 136 basis points.
Analysts noted that higher energy costs, expectations of further central-bank rate hikes and rising sovereign debt have sustained a months-long global bond sell-off, pushing yields toward multi-decade highs.
"With long-term yields back around multi-decade highs, investors no longer have the luxury of valuing AI growth in a low-cost-of-capital world," said Charu Chanana, chief investment strategist at Saxo.
Chanana added that higher sovereign yields and increased corporate debt issuance for AI infrastructure are making capital both more expensive and more selective, focusing attention on balance-sheet strength and earnings quality.
In currency markets, the dollar remained strong as the euro fell for a fifth consecutive week, trading near $1.123 and approaching a 17-month low amid French debt concerns. Gold rose over 1 % to about $4,191 an ounce, supported by a slightly softer dollar and lower oil prices.