Stan Choe
Oil prices whipsawed and surged toward their highest levels since the war with Iran began, only for the leaps to quickly vanish. The US stock market, meanwhile, is rising following strong profit reports from big companies like Alphabet.
The S&P 500 rose 0.8 per cent and is just above its all-time high set earlier this week, as companies keep delivering fatter profits for the start of 2026 than analysts expected, even with very high oil prices and uncertainty about the economy. The Dow Jones was up 725 points, or 1.5 per cent, and the Nasdaq composite was 0.7 per cent higher.
The Australian sharemarket is set to jump, with futures at 5.03am AEST pointing to a rise of 127 points, or 1.5 per cent, at the open. The ASX lost 0.2 per cent on Thursday. The Australian dollar was 1.2 per cent higher to US72.01¢.
Alphabet led the way on Wall Street and climbed 9.4 per cent after the owner of Google and YouTube reported profit for the latest quarter that almost doubled analysts’ expectations. Investments in artificial intelligence “are lighting up every part of the business,” CEO Sundar Pichai said.
The steadiness on Wall Street followed manic swings in the oil market, where prices surged overnight on worries that the Iran war will affect the flow of crude for a long time. Iran has closed the Strait of Hormuz to oil tankers, keeping them pent up in the Persian Gulf and away from customers worldwide, while a US Navy blockade is preventing Iran from selling its own oil.
Traders are always buying and selling contracts for different kinds of oil, going out for many months. The price for a barrel to be delivered in June briefly went above $US126 overnight before pulling back toward $US114.09 at 4.29am AEST. US oil was 1.4 per cent lower to $US105.44.
Brent’s price is still much more expensive than the roughly $US70 level it was at before the war. But the morning’s easing, along with the continuing flood of better-than-expected profit reports from US companies, helped keep Wall Street stable near its records.
Caterpillar and Eli Lilly rallied by more than 10 per cent and Royal Caribbean jumped 4.4 per cent after delivering profits for the latest quarter that topped analysts’ expectations. That’s big because stock prices tend to follow the track of corporate profits over the long term.
Still, a better-than-expected result isn’t always enough to boost a stock’s price if it’s already shot much higher.
Meta Platforms tumbled 8.8 per cent even though the company behind Facebook and Instagram made more profit last quarter than expected. Investors focused more on Meta’s increased forecast for how much it will spend on data centres and other investments this year as it builds out its AI capabilities, up to a range of $US125 billion to $US145 billion.
Doubts are still high among some investors about whether all the AI spending by Meta and other companies will produce enough profit and productivity to make it worth it.
Microsoft fell 5.2 per cent after likewise raising its forecast for investments and other capital spending. But analysts also said accelerating trends at its Azure business were encouraging.
Amazon slid 1.1 per cent despite blowing past analysts’ expectations for earnings in the latest quarter.
In the bond market, Treasury yields eased after oil prices gave up their big overnight gains. Reports also suggested the US economy’s growth accelerated by less in the first three months of the year than economists expected, while a measure of inflation worsened in March by about as much as expected.
A separate report said that fewer US workers applied for unemployment benefits last week in an indication of fewer layoffs even though companies are announcing large cuts to workforces.
The yield on the 10-year Treasury eased to 4.39 per cent from 4.42 per cent late on Wednesday.
In stock markets abroad, indexes rose in Europe following a weaker finish in Asia.
London’s FTSE 100 jumped 1.6 per cent after the Bank of England kept its main interest rate on hold. That followed similar decisions by the U.S. Federal Reserve on Wednesday and the Bank of Japan on Tuesday to keep their rates unchanged.
Germany’s DAX returned 1.4 per cent, and France’s CAC 40 rose 0.5 per cent after the European Central Bank also held its own interest rates steady.
Hong Kong’s Hang Seng lost 1.3 per cent, while stocks added 0.1 per cent in Shanghai after a report said China’s factory activity slowed slightly in April but remained in expansion territory for the second month.
AP
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