Matt Britzman, senior equity analyst, Hargreaves Lansdown: “Global markets are looking more positive today, if only a touch, largely driven by a let-up in oil prices after a volatile week for energy markets. Oil slipped back this morning, on the back of a five-day rally as the Trump administration signalled it’s considering several steps to tackle the recent surge in oil and gas prices. Potential measures under discussion include releasing crude from US emergency reserves, granting waivers on fuel-blending requirements, and even allowing the US Treasury to trade oil futures. The move has helped calm nerves across markets this morning, with investors encouraged that policymakers are actively looking to contain the economic fallout from higher energy costs.
That said, it’s worth keeping the broader move in perspective - oil has still jumped nearly 20% this week, putting it on track for its biggest weekly advance since February 2022. Higher prices tend to feed through to consumers almost immediately via rising petrol costs, which in turn risks reigniting inflation pressures just as central banks were hoping for some relief. Still, stock markets have been reasonably robust considering the events, a signal that investors are siding with the transitory narrative for now, a view we share.
Gold is trading up to around $5,110 per ounce this morning but is still on track for its first weekly decline in five weeks - something that may come as a surprise given the ongoing geopolitical tensions. While the Middle East conflict has boosted demand for safe-haven assets, the resulting surge in oil prices has stoked fresh inflation concerns, prompting traders to dial back expectations for rate cuts. Markets are now pricing in just one US cut this year, down from two earlier in the week, after surging oil prices and a run of solid US data pointed to continued economic resilience. Rate expectations often don’t get the attention they deserve, but they’ve quietly been one of the biggest forces at play this week.
Chip stocks could face a fresh bout of policy uncertainty after reports that the US is toying with the idea of new export controls on advanced AI chips - an unwelcome twist for the sector, especially after this administration scrapped Biden-era “AI diffusion” rules last year. The proposed framework could require government approval for shipments of AI chips to countries outside the US, effectively giving Washington a gatekeeper role in global semiconductor sales. Even so, this isn’t unfamiliar territory for chipmakers, who have navigated multiple rounds of export restrictions in recent years - meaning while it may add some administrative friction, it’s unlikely to materially dent financials if it comes to pass.”
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