LONDON: Wall Street stocks slid on Friday despite banks beating expectations at the start of earnings season as oil and gold prices shot up amid worries about the conflict in the Middle East widening.

“Geopolitical worries have triggered some risk aversion, but worries about a growth slowdown have presumably triggered some residual angst about corporate earnings not living up to expectations,” said Briefing.com analyst Patrick O’Hare.

Oil prices were up more than two per cent as regional tensions soared after Iran threatened reprisals over a strike in Syria this month that killed two Iranian generals.

Brent crude futures were up 94 cents, or 1.1pc, at $90.68 a barrel by 1:40pm EDT (1740 GMT), while US West Texas Intermediate crude futures rose 96 cents, or 1.1pc, to $85.98.

For the week, Brent was set to fall around 0.5pc, while WTI was on track to close 1pc lower.

Gold prices rose above $2,400 per ounce to an all-time high on Friday, heading for their fourth week of gains, as growing tensions in the Middle East prompted investors to seek refuge in the safe-haven assets.

Spot gold eased 0.8pc to $2,353.35 per ounce as of 1:40 p.m. ET (1740 GMT), taking a breather after hitting a record high of $2,419.79. Prices were up around 1pc for the week.

US gold futures settled 0.1pc higher at $2,374.1.

Investor attention was set to focus on the start Friday of the corporate earnings season after economic data released earlier this week largely killed off the possibility that the US Federal Reserve could begin cutting interest rates in June.

Equity markets took the recalibration of expectations of interest rate cuts in their stride as the data showing the US economy in strong health raised hopes that companies will report strong earnings.

At the start of the year markets had priced in six interest cuts by the Fed in 2024, but now expect only two.

JPMorgan Chase, Wells Fargo and Citigroup all reported better-than-expected earnings results for the first quarter. But shares in JPMorgan Chase, which have risen strongly this year, fell by more than four percent after trading got under way in New York.

Shares in Wells Fargo and Citigroup rose modestly.

Wall Street’s main indices fell at the opening bell.

Eurozone stock markets mostly rose after the European Central Bank signalled Thursday a likely June interest rate cut.

“Despite a few volatility spikes, EU stock investors reacted positively to ECB President Christine Lagarde’s speech. The central banker reassured everyone, saying the ECB would stick to its rate-cut plan regardless of the recent hot inflation report in the US,” said ActivTrades analyst Pierre Veyret.

London stocks fizzed higher on data showing the UK economy grew for a second straight month in February, further fuelling recovery hopes after sliding into a shallow recession in the second half of last year.

Dimming hopes for US rate cuts continued to support the dollar, which surged to another 34-year high above 153 yen, putting Japanese officials in the spotlight after they said they were ready to intervene in markets to support their currency.

Published in Dawn, April 13th, 2024