Stocks Near Record Highs as Oil Prices Surge Amid Geopolitical Tensions

Global stocks hovered near record highs on Friday, as benign US inflation data dented expectations for a rate hike next month. This came despite oil prices rising due to stalled peace efforts in the Middle East and US economic pressure on Iran.

The MSCI All-World index was up for a third straight week, trading just below record highs. The STOXX 600 in Europe, however, was lower on the day, with losses in tech offset by gains in capital-intensive shares like defence and carmakers.

Brent crude futures rose 1.7% to $88.5 a barrel, heading for a 6% weekly gain. European natural gas futures were set for a 10% gain, while US gas futures would rise 3.5%. The VIX volatility index was on track for its fourth weekly fall in a row.

John Sidawi, senior portfolio manager for fixed income at Federated Hermes, noted the disconnect between geopolitical uncertainty and asset price volatility. He warned that markets may eventually demand higher risk premiums if there's a meaningful escalation in conflict or a clear path toward resolution.