According to insiders, the U.S. and Iran are on the verge of a preliminary agreement to end their conflict. A draft framework reportedly envisages a permanent halt to attacks while bypassing the most contentious issues, according to negotiating circles. Oil prices retreated by more than three percent. Brent North Sea crude fell to 97.44 dollars at one point, while U.S. WTI traded at 91.92 dollars per barrel. On Wednesday, prices had already plunged by around twelve percent at certain intervals.
Investors are hoping that negotiations will lead to the reopening of the Strait of Hormuz, a critical waterway for oil transport currently blocked by Iran. According to a report by the Saudi news agency Al Arabiya, an agreement has been reached to ease the U.S. blockade of Iranian ports in exchange for a phased reopening of the Strait of Hormuz.
INVESTORS HOPE FOR AN END TO THE ENERGY CRISIS
Crude oil supply disruptions since the start of the conflict in late February have caused prices to skyrocket, triggering an energy crisis. Brent hit its highest level since March 2022 last week at over 126 dollars per barrel. However, experts warn that even in the event of a breakthrough in peace talks, investors must brace for sustained high oil prices. Even if the strait is reopened in the coming weeks, oil prices are unlikely to decline significantly in the short term due to damage to energy infrastructure, according to analysts at OCBC Bank.
In the foreign exchange market, the euro benefited from the drop in oil prices, as the EU is heavily dependent on oil and LNG imports. It rose by as much as 0.3 percent to 1.1787 dollars. Conversely, the dollar index retreated, trading 0.2 percent lower. Given the weakening U.S. currency, investors turned to gold. The precious metal appreciated by 1.3 percent to 4,748 dollars per troy ounce. Gold prices have fallen by more than ten percent since the start of the conflict in late February, weighed down by inflation concerns fueled by high oil prices.
HENKEL LEADS DAX AFTER EARNINGS
On the corporate front, a series of earnings reports triggered significant price swings. Henkel shares were among the top Dax gainers, rising 5.6 percent. Despite weak consumer sentiment, the consumer goods group reported a slight increase in organic sales. On the losing side, Siemens Healthineers dropped nearly five percent. The medical technology group cut its revenue and profit guidance for the current fiscal year, citing its diagnostics division.
In the mid-cap MDax index, engine manufacturer Deutz impressed with its cost-cutting program, reporting growth in both revenue and profit for the first quarter. The shares surged by as much as 9.4 percent. At Lanxess, weak demand, persistent pricing pressure from Asia, and unfavorable exchange rates took a heavy toll. The Cologne-based specialty chemicals group suffered a collapse in earnings in the first quarter, sending its shares tumbling by eleven percent.
On the Milan Stock Exchange, investors dumped Campari shares after the spirits group's first-quarter sales fell short of expectations. The stock crashed 14 percent. Competitors Diageo and Pernod Ricard each fell by nearly two percent.
At Maersk, investors were apparently disappointed by the outlook: shares of the Danish shipping giant fell 6.6 percent. Despite first-quarter profits exceeding expectations, the full-year guidance remained unchanged. Private bank Berenberg expressed 'moderate surprise' that estimates were not raised, noting that the bank's stance appears increasingly conservative.
(Reported by: Daniela Pegna. Contribution: Anika Ross, edited by Christian Götz. For inquiries, please contact our editorial team at berlin.newsroom@thomsonreuters.com (for politics and economics) or frankfurt.newsroom@thomsonreuters.com (for companies and markets).)
