Middle East tensions weigh on markets

NEW YORK: Wall Street stocks tumbled on Friday despite solid bank earnings as oil and gold prices shot up amid worries about a potential widening of conflict in the Middle East. After spending the entire session in the red, the Dow Jones Industrial Average finished down 1.2 percent, or 475 points, at 37,983.24.

“Heightened geopolitical uncertainty in front of a weekend contributed to today’s sell-off,” said Briefing.com. Market watchers cited worries about an imminent attack on the Zionist entity by Iran to retaliate for a strike in Damascus—a possibility also raised by President Joe Biden, who urged Iran against the move.

Oil prices surged more than two percent at session peaks before easing somewhat. Gold also benefitted from its status as a haven investment, breaking the $2,400 per ounce level. 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, sank 6.5 percent, while the other two banks retreated by less. While Paris and Frankfurt edged lower, London stocks fizzed higher on data showing the UK economy grew for a second straight month in February, further fueling recovery hopes after sliding into a shallow recession in the second half of last year. — AFP