Oil retreat helps US and European markets steady

The main international oil contract, Brent North Sea crude, fell back below $100 a barrel on Friday after rising above that level the previous day, helping US and European stock markets stabilise.

Brent and the key US contract, West Texas Intermediate, both declined by more than two percent. Brent had risen seven percent on Thursday and WTI more than six percent after Yemen's Houthi rebels struck oil tankers in the Red Sea, raising concern about a new front in the Middle East war. US President Donald Trump also threatened the Iran-backed fighters with major military punishment.

The United States launched fresh strikes on Iran on Friday, but markets drew some relief from signs that some ships were still able to pass through the Bab al-Mandeb strait, an important route into the Red Sea. UBS commodities analyst Giovanni Staunovo said ships carrying Saudi crude were still crossing, meaning it was not a full blockade for now and reducing some risk of an even tighter oil market.

Wall Street opened broadly stable. The Nasdaq Composite slipped 0.1 percent as technology stocks remained under pressure. Briefing.com analyst Patrick O'Hare said the response was not strong given the previous day's losses, but gave markets something to build on after the Nasdaq lost more than two percent and the Dow and S&P 500 each fell one percent on Thursday.

European markets advanced, helped by the fact that technology stocks are less dominant in the region. Asian markets followed Thursday's Wall Street sell-off, with investors reacting to the Middle East conflict, the earlier jump in oil prices above $100 and concerns about the artificial intelligence boom.

The report said analysts saw traders facing pressure from three areas at once: high oil prices, high government borrowing costs and concern about technology company valuations. Technology firms were again among the hardest hit as investors questioned when large spending on AI hardware, factories and research would produce returns.

Alphabet, Google's parent company, fell almost seven percent and Tesla dropped more than 14 percent after their capital spending plans came under scrutiny. Meta, Microsoft and Amazon have already said they expect to spend more than $700 billion this year on AI ambitions, and are due to report next week.

Government bond yields also rose. The yield on 10-year US Treasuries reached an 18-month high, and expectations of interest rate increases strengthened. David Morrison at Trade Nation said expectations that the US Federal Reserve could raise interest rates at next week's meeting had risen from 13 percent last week to 30 percent. He also cited the CME FedWatch Tool as showing a 90 percent probability of at least one 25-basis-point rate increase before the end of the year.

Around 1330 GMT, Brent North Sea crude was down 2.7 percent at $97.93 a barrel, and West Texas Intermediate was down 2.3 percent at $90.10 a barrel. In New York, the Dow was up 0.2 percent at 51,808.68 points, the S&P 500 was up less than 0.1 percent at 7,411.41, and the Nasdaq Composite was down 0.1 percent at 25,108.77.

In Europe, London's FTSE 100 was up 0.6 percent at 10,706.09, Paris's CAC 40 was up 0.5 percent at 8,343.15, and Frankfurt's DAX was up 0.8 percent at 24,969.00. In Asia, Tokyo's Nikkei 225 closed down 2.7 percent at 64,611.15, Hong Kong's Hang Seng Index closed down 1.0 percent at 24,963.23, and Shanghai's Composite index closed down 1.6 percent at 3,814.20.

The euro was down at $1.1369 from $1.1377 on Thursday. The pound was up at $1.3319 from $1.3315. The euro was down at 85.38 pence from 85.44 pence, and the dollar was up at 163.87 yen from 163.85 yen.