Oil Breaks $100 as geopolitical tensions grow. Stocks take a hit on rising yields

Key Takeaways

• Brent crude climbed above $100 as attacks on Saudi tankers and restricted traffic through the Strait of Hormuz intensified supply concerns.

• Rising oil prices pushed Treasury yields and the dollar higher, while markets increased expectations that the Federal Reserve may need to raise rates.

• U.S. technology stocks came under pressure after Alphabet and Teslas results renewed concerns about the cost and cash-flow impact of heavy AI investment.

• Gold reversed from a two-week high above $4,160 and moved back toward $4,030 as higher yields and a stronger dollar outweighed safe-haven demand.

• The ECB kept its deposit rate at 2.25% but left the door open to further tightening if the energy shock continues.

US Equities: Oil and Geopolitics Weigh on Technology Stocks

Wall Street began the week cautiously as investors monitored developments in the Middle East and prepared for major technology earnings. Semiconductor shares initially recovered, helping the Nasdaq stabilise after the previous weeks sell-off.

Sentiment improved temporarily on Tuesday and Wednesday, supported by a rebound in chip stocks and expectations that strong corporate investment in artificial intelligence would continue supporting semiconductor and data-centre demand.

That recovery reversed sharply on Thursday. Alphabet and Tesla fell after their quarterly results raised concerns about the amount of cash required to fund AI infrastructure.

Oil-related pressures added to the weakness. Higher energy prices pushed Treasury yields upward and increased the discount rate applied to highly valued growth stocks. Strong Intel results offered limited relief on Friday as traders remained focused on oil, yields, and next weeks Federal Reserve meeting.

Gold and Oil: Energy Shock Dominates the Week

Brent crude was the weeks strongest major market mover. Prices rose from $89.22 on Monday to above $100 by Friday after gaining 2% on Tuesday, 3.4% on Wednesday, and 7% on Thursday. Brent briefly reached $102, its highest level in two months.

Gold moved in the opposite direction by the end of the week. The precious metal climbed from below $4,000 to a two-week high of $4,166 on Wednesday as geopolitical tensions supported safe-haven demand. The metal then fell around 2% on Thursday and extended its decline toward $4,030 on Friday.

The reversal showed that rising Treasury yields and tighter Federal Reserve expectations were having a stronger effect than geopolitical demand. Gold therefore ended the week under renewed pressure.

Forex: Dollar Strength Returns as Yields Rise

The U.S. dollar strengthened toward a three-week high as the oil surge increased inflation concerns and pushed Treasury yields higher.

EUR/USD began the week near 1.1430 but fell to a weekly low of 1.1364 on Thursday after the ECB left rates unchanged and the dollar strengthened. The pair recovered slightly toward 1.1384 on Friday but remained below its earlier weekly levels.

The ECB kept its deposit rate at 2.25% but said it was monitoring the intensity, duration, and indirect effects of the energy shock. Markets continue to expect further tightening if elevated oil and gas prices persist.

Forecast: Week of July 27–31

Next week is likely to be driven by the Federal Reserve, U.S. growth and inflation data, oil prices, and another heavy round of technology earnings.

The Federal Reserve meets on July 28–29. The immediate rate decision will be important, but traders are likely to focus more closely on how policymakers assess the inflationary impact of oil above $100. A more hawkish message could push Treasury yields and the dollar higher while maintaining pressure on technology stocks and gold.

U.S. second-quarter GDP and June Personal Income and Outlays, including the PCE inflation figures, will be released on July 30. Strong growth or higher inflation could reinforce expectations of tighter policy, while weaker readings could reduce rate-hike pricing.

Microsoft and Meta report after the U.S. close on July 29, followed by Amazon on July 30. Traders will focus on cloud growth, AI demand, infrastructure expenditure, margins, and free cash flow after this weeks negative reaction to Alphabet and Tesla.

Brent retains a bullish near-term bias while the threat to regional shipping remains unresolved. Holding above $100 would keep inflation and rate expectations elevated. A credible ceasefire or improvement in tanker traffic could trigger a sharp correction.

Gold is likely to remain sensitive to yields. Continued trading below the short-term daily moving averages would keep the outlook under pressure, while a decline in oil prices or a less hawkish Fed could support a recovery.

EUR/USD may remain pressured while the dollar is supported by higher U.S. yields. The pair would require a sustained recovery above the 1.1400–1.1420 area to improve the broader technical outlook.

Major Economic Calendar Events for the Upcoming Week