European shares opened lower on Friday as oil prices climbed to five-month highs, fueled by escalating tensions in the Middle East. Brent crude reached $114.73 per barrel, up 0.9%, while US benchmark West Texas Intermediate crude rose 1.3% to $100.75. The surge came after deadly attacks in Saudi Arabia heightened fears of a broader regional conflict disrupting global energy supplies. Shipping costs for crude from the Middle East to Asia have also skyrocketed, adding to the pressure on oil prices.
The pan-European Stoxx 600 dropped 0.4% in early trading, with London’s FTSE 100 down 0.3%, France’s CAC 40 falling 0.8%, and Germany’s DAX shedding 0.5%. Kering led the declines, with its shares tumbling more than 11% after Gucci’s sales fell 6% year on year in the third quarter, raising doubts about the luxury group’s recovery prospects.
In the US, tech stocks continued their sell-off, with the S&P 500 down 1.2% and the Nasdaq composite tumbling 2.6% on Thursday. AI-related stocks, including Meta Platforms, Tesla, and Nvidia, faced significant declines amid concerns over high borrowing costs for data centers and AI chips. Nvidia, the largest company by market value on Wall Street, was the biggest drag on the S&P 500, falling 4.4%. CoreWeave, a cloud services provider, dropped 10.1% due to worries about its debt.
Bond markets also saw volatility, with US Treasury yields falling sharply on Thursday after a global bond sell-off. The 10-year Treasury yield dropped 16 basis points to 4.97%, despite signs of a resilient US economy. Investors are now watching for preliminary business activity surveys in the eurozone, the UK, and the US for further insights into economic growth amid higher energy prices and borrowing costs.