Stocks retreat as US-Iran peace talks stall
The Wall Street sign is pictured at the New York Stock Exchange in the Manhattan borough of New York City, New York, US, Mar 9, 2020. (File photo: REUTERS/Carlo Allegri)
LONDON: Stock prices fell across the board Thursday (Apr 23) from their recent highs as investors tempered enthusiasm for a quick end to the Middle East war.
The benchmark international oil contract, Brent North Sea crude, was back above US$100 a barrel, threatening widespread inflation that could dent economies around the globe.
Wall Street's main indexes opened lower, tracking losses in Europe and Asia.
Amid an extension to a fragile ceasefire, the United States and Iran seemed no closer to resuming lasting peace talks. Iran vowed it would not reopen the Strait of Hormuz, through which one-fifth of global oil is shipped, as long as the United States blocks its ports.
Surging energy prices have roiled economies worldwide, though equity markets have recently largely recovered from losses sparked by the US and Israeli strikes on Iran in late February.
Solid first-quarter corporate earnings this week and resilient AI enthusiasm have supported stocks, though analysts say a prolonged Middle East war could quickly rattle confidence.
Stocks are down Thursday "as risk aversion builds off the back of yet another damaging phase of this crisis", said Joshua Mahony, chief market analyst at Scope Markets.
"While previous market moves were driven by escalation and de-escalation of the conflict, we are now heading towards a slow grind higher for energy prices as the prospect of a drawn-out stalemate comes into play," he said.
But in Paris, the CAC 40 remained in the green thanks largely to the cosmetics heavyweight L'Oreal, whose stock surged after it reported a 3.6 per cent rise in sales, boosted by growth in professional and dermatological products.
Analysts say healthy company results overall and a resumption of bullish artificial intelligence trades have helped to support equities despite the uncertainties sparked by the war against Iran.
Almost 80 per cent of the companies in the S&P 500 index that have reported first-quarter earnings have surpassed analyst estimates, according to Bloomberg.
Tesla reported Wednesday first-quarter profits that topped expectations as it confirmed plans for huge investments in autonomous transport, humanoid robotics and AI.
In Asia, Seoul also bucked the downward trend to reach a record high on a fresh rally in the tech sector, which has been the backbone of a surge in the Kospi index this year.
In the eurozone, business activity contracted in April for the first time in 16 months as the war in the Middle East drove up energy prices and disrupted global supply chains, a closely watched survey showed Thursday.
The Flash Eurozone purchasing managers' index (PMI) published by S&P Global, a gauge of the overall health of the economy, registered a figure of 48.6 for April, down from 50.7 in March.
A reading above 50 indicates growth, while a figure below 50 shows contraction.
