Middle East tensions drive oil prices By Reuters

A look at the day ahead in European and global markets from Rae Wee

Oil prices headed for their biggest weekly gain in more than a year on Friday, boosted by escalating tensions in the Middle East that weighed on global markets ahead of the weekend.

Most stock indexes and stock futures were in the black, but gains were limited as investors speculated that Israel could soon carry out retaliatory strikes on Iran.

futures were set to gain around 8% this week – the most since February 2023, while futures’ 8.2% weekly gain would be the biggest since last March.

Markets may have taken some comfort from US President Joe Biden saying he does not believe there will be “all-out war” in the Middle East. However, he previously indicated that the US was discussing strikes on Iran’s oil facilities in response to Tehran’s missile attack on Israel.

Despite oil recovering from a low base and prices returning to levels seen just a month ago, global equities and investors’ risk appetite are starting to feel the squeeze.

If geopolitical tensions persist and oil prices continue to rise, investors may have to reassess their inflation forecasts.

The risk of conflict escalating in the Middle East is also likely to keep Federal Reserve Chairman Jerome Powell on his toes, and may have had a role to play when he said the US central bank would likely stick with cutting interest rates by a moving quarter percentage point. redirect.

The last thing it would want is for the Fed to ease policy too quickly only to see a resurgence of inflation.

Of course, resilience in the US economy is also the more obvious — and less worrisome — reason to go slower on rate cuts.

September’s non-farm payrolls report takes center stage later in the day, although recent data showing continued strength in the labor market and impressive activity in the services sector suggest there is little cause for concern heading into release.

The day will also feature a series of speeches from European Central Bank policymakers and one from Bank of England (BoE) Chief Economist Huw Pill.

It remains to be seen whether Pill could strike the same dovish tone as his boss Andrew Bailey, who said the BoE could move more aggressively to cut interest rates if inflationary pressures continue to ease.

In some good news elsewhere, US East Coast and Gulf ports began to reopen late Thursday after dock workers and port operators reached a wage agreement to resolve the industry’s largest work stoppage in almost half a century.

Key developments that could influence markets on Friday:

– US Non-Farm Payrolls Report (September)

– This is Huw Pill from the Bank of England

– Speeches by various decision-makers of the European Central Bank