Crude rose as President Donald Trump said the US must make “a meaningful deal” with Iran, adding that the next 10 days will show whether an agreement is reached. U.S. Treasury bonds edged higher on Thursday, with gold hovering around $5,000 an ounce. US stocks also fell, with alternative asset managers facing sharp declines after a private credit fund halted redemptions.Caution has returned to markets as US actions against Iran added a new layer of geopolitical risks, holding back a tentative recovery in equity prices and dampening broader risk appetite. The renewed tensions threaten to derail a nascent recovery that has begun to take hold after weeks of volatility driven by concerns about AI-related disruption across industries and companies.
With Iran’s military allies severely weakened and its economy in crisis, the country is not in a very strong negotiating position, so markets are likely expecting a diplomatic solution, said Dennis Follmer of Montis Financial.
“Right now, stocks have not priced in US-Iran tensions,” he said.
The US military is stationing a wide range of forces in the Middle East, including two aircraft carriers, fighter jets and tankers, giving Trump the option for a major attack on Iran as he pressures the country to make a deal on its nuclear program. The US military buildup in the Middle East means the window for Iran to reach a diplomatic deal over its atomic activities is in danger of closing, the head of the United Nations nuclear watchdog said. A potential war would jeopardize flows from a region that pumps about a third of the world’s oil production.
“Crude oil prices are rising in anticipation of possible military action in Iran,” said Louis Navellier of Navellier & Associates. “The US and Iran are expected to meet again, and those negotiations are expected to be closely watched.”
West Texas Intermediate traded below $67 a barrel, after rising about 7% in the previous two sessions, while Brent closed around $72.
Some traders also attributed the risky mood to caution ahead of Friday’s readings on the economy and inflation, especially after minutes from the Federal Reserve’s latest meeting showed renewed concerns about price pressures. In addition, the U.S. Supreme Court has scheduled Friday as its next opinion day as a ruling on Trump’s signature tariffs is awaited around the world.
Another dampening sentiment among investors was Blue Owl Capital Inc.’s decision. to limit withdrawals from one of its private credit funds, raising concerns about risks bubbling beneath the surface of the $1.8 trillion market. Shares fell about 6% on Thursday, dragging peers like Apollo Global Management Inc., Ares Management Corp. and TPG Inc.
Traders also kept an eye on the latest US economic data.
On Friday, the government will release its first estimate of gross domestic product for the fourth quarter, a period that included the longest federal government shutdown ever. The latest economic report card is expected to show growth has cooled to a still solid annual pace, after growing at the fastest pace in two years in the previous quarter.
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