Europe is weaker, the US is more resilient: expensive energy and record-breaking technology

Three days in which the market bought hope, but priced risk

Between Wednesday, April 22nd and Friday, April 24th, financial markets experienced one of those classic weeks where the apparent direction of the indices only tells half the story. On the one hand, Wall Street continued to show strength, with the S&P 500 and the Nasdaq capable of closing at new all-time highs. On the other, oil, emerging market currencies, UK inflation, and tensions in the Strait of Hormuz reminded investors that the truce in the Middle East remains fragile, incomplete, and, above all, reversible.

The common thread was the ceasefire between the United States and Iran, extended by Washington but still lacking a truly stable diplomatic framework. On Wednesday, the market reacted positively to the extension, but almost simultaneously, Iran seized two ships in the Strait of Hormuz, a passage through which approximately a fifth of the world's oil and LNG supplies pass. On Friday, the situation reopened with the arrival of Iranian Foreign Minister Abbas Araqchi in Pakistan and the announcement of Steve Witkoff and Jared Kushner's departure for Islamabad, although Tehran clarified that it did not intend to meet directly with American representatives.

Wall Street holds firm: the market looks to earnings and semiconductors

The US stock market's reaction was almost surgical: selling risk at the worst times, but buying back tech as soon as a diplomatic window appeared. On Wednesday, the Dow Jones rose 0.69% to 49,490.52 points, the S&P 500 rose 1.05% to 7,137.91, and the Nasdaq fell 1.64% to 24,657.57. On Thursday, the tone changed: hopes for a quick agreement with Iran cooled, news of Mohammad Bagher Ghalibaf's possible departure from the Iranian negotiating team heightened nervousness, and Wall Street closed lower, with the Dow down 0.36%, the S&P 500 down 0.41%, and the Nasdaq down 0.89%.

On Friday, however, the market rediscovered its favorite driver: technology. The S&P 500 closed at 7,165.08 points, up 0.80%, while the Nasdaq rose 1.63% to 24,836.60. The Dow, more exposed to the traditional economy, lost 0.16%. Semiconductors made the difference: Intel jumped 23.65% to $82.57 after better-than-expected guidance, the Philadelphia Semiconductor Index posted its 18th consecutive positive session, and the technology sector of the S&P 500 rose 2.46%. Essentially, the market has chosen to believe that AI and earnings can still offset the geopolitical noise.

Europe's Most Vulnerable: Energy, Margins, and Growth

Europe had a different reaction. The Old Continent remains more exposed to the energy shock, both due to its dependence on imports and its industrial sensitivity to gas, oil, and fuel costs. On Wednesday, the STOXX 600 lost 0.4% to 613.88 points, with the DAX down 0.3% and the CAC 40 down 1%. On Friday, the pan-European index lost another 0.58%, falling to its lowest level in over two weeks and closing the week with a loss of 2.5%.

This is why Brussels has begun to think not just as a political authority, but almost as an energy risk manager. The European Commission has proposed amending fiscal rules to tax electricity less than natural gas, allow temporary cuts to zero for vulnerable households and energy-intensive industries, and coordinate the filling of gas storage facilities. This is a delicate issue: European storage facilities are only 31% full, while the target before winter is 80%. Furthermore, the EU is considering specific rules on jet fuel reserves, as currently there is a general requirement of 90 days of oil stocks, but no specific requirement for aviation fuel.

Oil, gold, rates and currencies: the war enters prices

Oil remained the most immediate gauge of risk. On Wednesday, WTI rose 3.67% to $92.96 a barrel, and Brent crude rose 3.48% to $101.91. The move continued on Thursday, with WTI gaining 3.11% to $95.85 and Brent crude gaining 3.10% to $105.07. On Friday, amid some hope of a resumption of talks, WTI fell 1.51% to $94.40, and Brent crude fell 0.25% to $105.33, but the level remains high enough to impact inflation, corporate margins, and interest rate expectations.

The bond market also showed tension. The 10-year U.S. Treasury note rose to 4.304% on Wednesday and 4.327% on Thursday, while the 30-year note reached 4.9204%. The dollar maintained a defensive tone: on Thursday, the DXY index was at 98.80, with the euro at $1.1684 and the dollar/yen at $159.71. Gold, after recovering on Wednesday to $4,737.69 an ounce, fell 0.91% on Thursday to $4,694.44: not a linear flight from risk, but a market alternating between hedging, profit-taking, and reacting to real interest rates.

UK and emerging markets: where the shock is first seen

The United Kingdom provided one of the most important macroeconomic signals. March inflation rose to 3.3% from 3.0% in February, while fuel prices recorded a monthly increase of 8.7%, the strongest since 2022. Even more significantly, services inflation rose to 4.5%, while core inflation fell only slightly to 3.1%. This is the kind of combination that puts a central bank in trouble: raising rates risks hurting growth; waiting risks chasing inflation.

Pressure was also felt on emerging energy importers. The Indonesian rupiah hit a record low of 17,315 per dollar, prompting the central bank to intervene in the currency market. In the Philippines, the peso lost 0.4% despite the central bank raising its benchmark rate to 4.50% to contain inflation driven by energy costs. It's a classic dynamic: when oil remains above $100, countries most dependent on energy imports are punished first by their currencies and then by interest rates.

Politics, Central Banks and Conclusion

On the political front, the EU formally approved a €90 billion loan to Ukraine and a new sanctions package against Russia, reinforcing the idea that European security is now a combined fiscal, military, and energy issue. In the United States, the Justice Department closed its investigation into Jerome Powell, reducing uncertainty over the succession at the Federal Reserve. Meanwhile, Navy Secretary John Phelan didn't simply resign, but, according to Reuters, was fired after disagreements over the construction of new ships, at a time when Washington is strengthening its naval presence in the Middle East.

The summary of the three days is therefore clear: markets are not ignoring the war, but are separating winners from losers. Technology, AI, and Japan continued to benefit from the earnings narrative, with the Nikkei rising 0.97% on Friday to 59,716.18 points, a new closing record. Europe, emerging market currencies, companies exposed to fuel, and cyclical sectors, however, remain more vulnerable. The truce may be enough to lift the indices for a few sessions; to truly change the picture, a credible agreement, a safer Hormuz, and oil less dominating inflation expectations will be needed.