Oil prices rise, artificial intelligence under pressure: Europe fears a new debt crisis
Geopolitics once again dictates the price of energy
Attacks claimed by the Houthis against Saudi targets, including an airport and strategic infrastructure, have fueled renewed concerns about the security of energy supplies. The evacuation of Saudi Aramco's headquarters in Dhahran has transformed the risk into an operational problem.
Further complicating the situation are the IRGC's claims of attacks on vessels and mine incidents near the Strait of Hormuz. The claims are not fully verified, but the risk premium is rising: as Gulf routes become more uncertain, even a potential disruption to shipments is enough to move prices. Brent crude closed Friday at $116.72 a barrel , up 3.14% on the day.
Washington has authorized an emergency exchange of 400,000 barrels from its strategic oil reserves to support a Louisiana refinery affected by local supply problems. However, this is not a general price intervention. Meanwhile, the Russian-Ukrainian war has continued with attacks on infrastructure, maintaining high logistical and energy uncertainty.
Artificial intelligence meets the yield problem
Rising external tensions have been compounded by a revision of expectations for major technology players. The question is no longer simply how much artificial intelligence can grow, but rather when the enormous investments required to develop it will translate into sustainable earnings and cash flows. Quarterly results have shown that robust revenues are no longer enough.
The Nasdaq fell 2.6% on Thursday, while the Philadelphia semiconductor index dropped 6.7% . Meta fell about 7% despite better-than-expected business results: its plan to issue a new class of non-voting shares to finance growth has brought renewed attention to capital needs. Tesla has scaled back its annual investment plans, rekindling questions about the timing of its robotics and automation ambitions. Nvidia and Lam Research also suffered sell-offs.
It's not a widespread rejection of technology. Rather, it's a market that's starting to distinguish between innovation, the ability to monetize it, and the price already embedded in shares.
From China to European banks: the weakness spreads.
The correction wasn't confined to Wall Street. In China, the CSI 300 technically entered bearish territory, falling 20.2% from its June high. Weak domestic demand and the lack of convincing stimulus also weighed on the stock market.
In Europe, the sell-off hit banks the hardest: the Eurozone banking index fell 4.2% on Thursday. Results from Bankinter and Barclays highlighted margin pressures and the difficulty of transforming nominally high rates into growing profitability, while rising sovereign borrowing costs weakened sentiment.
France under observation, Treasuries a safe haven and the euro fragile
The most sensitive point in the European bond market remained France. Protests against budget measures, political instability, and doubts about the ability to reduce the deficit pushed the yield on the 10-year bond to 5.14% , a level not seen since 2002. The widening of the spread versus the Bund signals that investors are demanding higher returns to bear the French risk.
The fragility of sovereign debt is reflected in banks, the cost of credit, and the decisions of the ECB, forced to contend with energy inflation and weaker growth. The contrast with the United States was significant: during the equity sell-off, the yield on the 10-year Treasury note fell to around 4.95% , supported by defensive purchases. The euro, penalized by both French fears and the economic slowdown, weakened to around $1.119 .
Growth at different speeds, with inflation not disappearing
Business data confirmed a transatlantic divide. In the United States, the composite PMI stood at 57.6 points , signaling activity still buoyant, but accompanied by pressure on prices and supply chains. This makes it more difficult to ease monetary policy.
In the Eurozone, the same indicator fell to 51.9 points , consistent with a much more moderate expansion; in France, however, private activity has returned to contraction. The risk for Europe is a difficult combination: growth insufficient to support public profits and budgets, but energy too expensive to allow the central bank to respond expansively without hesitation.
Gold and industrial metals: the search for liquidity prevails over the search for safety.
The behavior of commodities completed the picture. Gold, despite a volatile geopolitical environment, fell below $4,000 an ounce , penalized by the prospect of longer-term high US interest rates and by selling to cover losses on other instruments. Silver followed the same trend, and platinum and palladium also suffered, confirming that fears of persistently high interest costs may prevail over demand for protection.
Copper, often considered a barometer of industrial activity, slipped to around $14,031 per ton , amid rising inventories in London warehouses. Its decline reflects a different reality than crude oil: not an immediate shortage, but a less convincing prospective demand.
Overall, the market isn't simply shifting from optimism to pessimism. It's simultaneously reassessing supply security, debt sustainability, and the payback period for technology investments. The cost of capital is connecting them, which is once again driving financial valuations.