Oil prices rise as Russia keeps targeting Ukrainian energy

Wall Street was mixed in holiday trading, with oil prices back on the rise as Russia continued to target Ukraine’s energy infrastructure, despite US President Donald Trump’s declaration of a ceasefire.

Meta Platforms was one of the stronger performers in a soft day for tech companies after chief executive Mark Zuckerberg said the firm’s new Muse Wonder artificial intelligence model had caught up with the big AI players at the frontier.

European stock markets were broadly stronger, with defence firms such as Rheinmetall, BAE Systems and Thales rallying, while French luxury firms gained even as LVMH Moët Hennessy Louis Vuitton warned of slowing sales growth.

And investor confidence dipped in the latest Sharesies quarterly index, with increased flows into savings products, while ASB Bank research challenged the widely held view that business activity tended to slow down in the run-up to general elections.

No ceasefire

Brent crude oil futures rose 2% to US$106.81 at 7am in Auckland as Russia continued to attack energy targets in Ukraine and as Houthi militants maintained their assault on Saudi Arabian infrastructure.

Ukraine President Volodymyr Zelenskyy said Russia broke the energy ceasefire announced by US President Donald Trump, but that his nation was ready to respect an agreement if Russia did the same.

Meanwhile, New Zealand foreign minister Winston Peters signed a joint statement recognising the UK’s attribution of Iranian involvement in the foiled incident at an air base used by US military. Iran denied involvement in the incident.

Stocks on Wall Street were mixed on the rising oil prices, with the Dow Jones Industrial Average up 0.4% in late trading, led by Chevron Corp, Visa and Coca-Cola, while the S&P 500 dipped 0.1% and the tech-heavy Nasdaq Composite was down 0.3%.

Chipotle declined after Starbucks dismissed reports it was considering a takeover of the burrito chain, while Salesforce advanced after it was upgraded to a ‘buy’ by Bank of America analysts.

AI infrastructure firms were broadly weaker, with Nvidia and Intel among the day’s decliners.

Meta jumped 4% in late trading after chief executive Zuckerberg told the Financial Times that the Muse Wonder AI model helped the firm catch up with the likes of Anthropic and OpenAI at the frontier, and played down the need to slow research.

“Technology was divided. Meta and Salesforce advanced, while Nvidia, Amazon and several AI infrastructure stocks fell,” Moomoo market strategy consultant Greg Boland said in a note. “The market is increasingly demanding evidence that heavy investment in artificial intelligence will deliver commercial returns, rather than rewarding the sector indiscriminately.”

Earnings loom

Earnings season kicks off in earnest on Tuesday in the US when the major banks such as JPMorgan Chase & Co report.

US bond cash markets were closed for the Columbus Day holiday. The yield on the US 10-year treasury was at 5.24%, compared with New Zealand’s equivalent at 5.03%.

Across the Atlantic, stock markets were stronger as investors prepared for what’s expected to be a strong earnings season. The UK’s FTSE 100 rose 1%, while Germany’s DAX advanced 0.8% and France’s CAC 40 increased 0.4%.

Hermès International led the French benchmark higher, while LVMH rose even as the luxury giant warned of slowing sales.

UK prime minister Andy Burnham pledged to push for closer relations with the European Union, saying he would attend a bilateral summit in Brussels next month and seek to renegotiate parts of the trade deal with the continent.

Australian futures are pointing to a 0.2% gain for the S&P/ASX 200 index when trading opens across the Tasman, while the kiwi dollar dropped to 55.85 US cents at 7am from 56.07 cents yesterday.

The Sharesies index fell to an average reading of 38 in the September quarter from 58 in the June period, as investor confidence was knocked through the period of rising oil prices and elevated geopolitical uncertainty. The platform’s users directed more of their funds into savings products, though a greater proportion still went into investing.

Meanwhile, ASB economist Mark Smith pushed back against the conventional wisdom that elections slow down business activity, saying sentiment measures were typically dented but that rarely flowed into reduced investment, spending and hiring.

No major local data are scheduled for today, while PGG Wrightson holds its annual meeting in Christchurch today.

Reporting by Paul McBeth. Image from Maria Lupan on Unsplash.