As of 12:00 Germany time (CEST, UTC+2)
TL;DR: Markets found limited relief on Friday after Brent pulled back from its overnight move above $100, but the broader setup remained fragile. Asian equities fell sharply, bond yields stayed near multi-year highs and investors continued questioning whether AI spending is producing enough near-term cash flow. Europe stabilised with help from SAP, yet the combination of higher energy prices, tariff risk and elevated rate expectations left the week’s inflation scare unresolved.
In Asian Equity Markets stocks fell as the oil shock and AI spending concerns hit sentiment at the same time. South Korea’s KOSPI dropped around 6 percent, while Japan’s Nikkei slid roughly 2.8 percent. Local semiconductor names remained under pressure even after stronger results from Intel, showing that investors are no longer treating individual earnings beats as enough to repair the wider chip trade. The regional weakness reflected the same pressure seen all week: higher energy costs, weaker currencies and less patience for crowded AI-linked positions.
In European Equity Markets stocks steadied after Thursday’s sharp selloff. The pan-European STOXX 600 moved higher in morning trading as SAP helped lift the technology sector, while investors also reacted to stronger German business-activity data. The recovery was not broad enough to erase the underlying concern. Oil and gas shares failed to benefit cleanly from higher crude after Neste missed profit expectations, and Europe remains particularly exposed to the combination of higher energy costs and tighter monetary policy.
In U.S. Equity Markets futures were mixed after Thursday’s technology-led decline. Alphabet and Tesla had already raised doubts about the cash cost of the AI buildout, while investors were still waiting to see whether Intel’s stronger results could provide more durable support for the chip complex. The focus is shifting quickly to next week, when Microsoft, Meta, Amazon and Apple report. The market wants evidence that AI capital spending is being converted into revenue growth, margins and cash generation rather than simply larger investment budgets.
In Commodities Markets oil remained the central macro driver. Brent traded around the high-$90s after briefly moving above $100 for the first time since May. The trigger was another escalation in Middle East shipping risk, with Houthi attacks on Saudi tankers in the Red Sea adding a second pressure point beyond the Strait of Hormuz. The pullback from $100 helped risk appetite, but the market is still pricing a more difficult supply backdrop than it was earlier in July.
In Currency Markets the dollar stayed firm as higher yields and tariff risk supported defensive demand. The yen remained pinned near 40-year lows, trading around 163 to 164 per dollar, and continued to draw warnings from Japanese officials. The yen’s weakness is becoming more uncomfortable because Japan imports most of its energy and is now facing a much higher crude price in dollar terms. The euro remained under pressure after the ECB held rates but kept the door open to further tightening.
In Bond Markets yields stayed elevated despite the pullback in oil. The U.S. 10-year Treasury yield eased from an 18-month high but remained close to 4.70 percent, while the 30-year yield stayed near 5.16 percent and close to a 19-year peak. Markets now price a meaningful chance of a Federal Reserve hike next week and more than fully price another move by September. Germany’s 10-year Bund yield also remained close to its highest level since 2011, showing that the oil shock is being transmitted directly into European rates.
The Cross-Asset Read
Friday’s bounce did not fully reverse Thursday’s damage.
Oil moved back below $100 and European equities recovered, but the reason markets were unsettled did not disappear. The energy shock has pushed bond yields higher, revived rate-hike expectations and made the AI cash-flow debate more urgent.
That is the week’s important shift. Investors are not just asking whether AI demand is strong. They are asking whether the companies funding the buildout can keep doing so without eroding free cash flow. Alphabet and Tesla made that concern visible. Intel’s stronger results helped the supply-side story, but they did not remove the question around returns on capital.
The macro backdrop is also less forgiving. Tariff increases on goods from 60 trading partners add another layer to the inflation story, while the Red Sea and Hormuz risks make the oil move harder to dismiss as a short-term headline shock.
The immediate flag is Brent at $100 and the U.S. 10-year yield at 4.75 percent. If oil reclaims $100 while the 10-year breaks above 4.75 percent, the pressure on equity valuations is likely to broaden. If Brent stays below $100 and yields settle back toward 4.60 percent, earnings can still stabilise the market.
The relief today is useful.
It is not yet a reset.
Subscribe to IronPeak Research for concise daily market wraps and cross-asset macro context
