Oil prices climb above $113 as AI sell-off rattles stocks and investors buy bonds
Rising energy prices added to inflation concerns as doubts over AI spending hit tech stocks; investors sought safety in US bonds, and France’s borrowing costs remained above 5%.
Oil prices surged past $113 per barrel on Friday amid fears of a potential regional conflict due to deadly attacks in Saudi Arabia, prompting investors to flock to bonds. The benchmark S&P 500 experienced its worst day since July, falling by 1.2%, while the Nasdaq composite plummeted 2.6%. Brent crude oil settled at $113.73 per barrel, up 0.5% from the previous session.
West Texas Intermediate crude rose 0.6% to $100.08 per barrel. The cost of shipping crude from the Middle East Gulf to Asia on large tankers had skyrocketed to over $37 per barrel by mid-October, more than five times its previous level. Gas prices also saw a significant jump, with November futures for the European benchmark, Dutch TTF, trading above €90 per megawatt-hour.
The AI sell-off hit tech stocks hard, with the S&P 500 and Nasdaq composite both experiencing substantial declines. AI-related stocks, such as Meta Platforms and Tesla, suffered significant losses, while Nvidia, the largest company on Wall Street by market value, saw a 4.4% drop. Meanwhile, bond market concerns loomed large over developed economies, with France's 10-year government bond yield reaching around 5.07%, and Italy's at approximately 4.61%.
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