LONDON (Reuters) – Oil prices tumbled from multi-month highs on Thursday, while gold fell back from a record peak after U.S. President Donald Trump appeared to back away from threats of potential U.S. military action against Iran, which doused investor demand for safe-haven assets.
Tech stocks got a boost from Taiwan’s TSMC2330.TW, the world’s biggest producer of advanced AI chips, which posted a forecast-smashing 35% jump in fourth-quarter profit. Shares in Dutch chip equipment maker ASML ASML.AS hit a record high, which in turn helped push Europe’s STOXX 600 .STOXX up 0.4% back towards record levels.
Currencies steadied, including the yen, which hit its weakest since July 2024 against the U.S. dollar on Wednesday. It retraced some of that decline after Japanese authorities issued a series of verbal warnings that suggested they may intervene to support the currency.
TRUMP SAYS IRAN PROTESTS SUBSIDING
Trump said on Wednesday afternoon that he had been told that killings in Iran’s crackdown on nationwide protests were subsiding and he believed there was currently no plan for large-scale executions.
This knocked Brent crude futures LCOc1 down 3.3% to $64.32 a barrel on Thursday, after they had risen to a high of $66.82 the day before.
With the risk of immediate action in Iran appearing to recede, gold eased back from a record $4,642.72 an ounce to trade at $4,610, down around 0.2% on the day.
Trump said in an interview with Reuters on Wednesday he has no plans to fire Federal Reserve Chair Jerome Powell, into whom the Justice Department has opened a criminal investigation.
“Right now, we’re (in) a little bit of a holding pattern with him, and we’re going to determine what to do. But I can’t get into it. It’s too soon. Too early,” he said.
WALL STREET ROTATION
S&P 500 E-mini futures EScv1 rose 0.3% after the benchmark index .SPX sank 0.5% overnight. The tech-focused Nasdaq Composite .IXIC dropped 1%.
“There’s a rotation playing out on Wall Street that’s ultimately weighing on indices but indicates that the internals of the market are holding up reasonably well,” said Kyle Rodda, an analyst at Capital.com.
Highlighting that greater breadth in the market is the performance in January of the equal-weighted S&P 500 .EWGSPC, which strips out the effects of the mega-cap stocks that dominate the benchmark index. The equal-weighted S&P has risen 3.6% in January, versus an increase of just 1.1% for the S&P 500 itself, while the small-cap Russell 2000 .RUT is up nearly 7% this month.
“We saw more of the rotation pattern at play since the start of the year, with the small-cap Russell 2000 (+0.70%) hitting a new record as it outperformed the S&P 500 for the ninth session in a row,” Deutsche Bank strategist Jim Reid said.
Goldman Sachs GS.N and Morgan Stanley MS.N headline the earnings calendar on Thursday. Rivals Bank of America BAC.N, Citigroup C.N and JPMorgan JPM.N have all reported and the takeaway is that lenders have boosted their profits thanks, in part, to increasing demand from customers – a sign the economy is holding up for now.
JAPAN YEN GETS RESPITE FOR NOW
The U.S. dollar was steady against other major currencies on Thursday. It was held at 158.35 against the yen, roughly unchanged from levels late on Wednesday, having dropped to an overnight low of 158.095.
Prime Minister Sanae Takaichi plans to call a snap parliamentary election as early as February 8. Her spending plans have sparked concern among investors about the impact on government finances, while the Bank of Japan appears more reticent to raise interest rates to temper inflation, both of which have weighed on the yen for months.
The euro EUR= was a touch weaker at $1.1638, while the pound hovered around $1.3443, having shrugged off data that showed the British economy grew more strongly than expected in November.
(Additional reporting by Kevin Buckland in Tokyo; Editing by Shri Navaratnam, Thomas Derpinghaus and Ed Osmond)
