Oil Prices Drop on US-Iran Progress; Global Shares Gain in Choppy Trade

Commodity

Energy

Summary:

Brent futures closed down over 2% as U.S. President Donald Trump, in the midst of a Middle East tour, said he was getting close to securing a deal with Iran - and that Tehran had "sort of" agreed to the terms.

Oil dropped over 2% on Thursday as a potential U.S.-Iran nuclear deal raised the prospect of increased global crude supply, and Wall Street indexes were mixed in choppy trading.

European shares reversed losses to end higher, with corporate earnings in the spotlight, and gold prices jumped over 1%.

U.S. producer prices fell unexpectedly in April and retail sales were mixed, data showed on Thursday.

Global equities (.MIWD00000PUS) rose 0.3%, while emerging market stocks eased.

U.S. Federal Reserve officials feel they need to reconsider the key elements around both jobs and inflation in their current approach to monetary policy, Chair Jerome Powell said during opening remarks at a two-day conference.

Russian President Vladimir Putin spurned a challenge to meet face-to-face with Ukrainian President Volodymyr Zelenskiy in Turkey, dealing a blow to prospects for a peace breakthrough.

Ali Shamkhani, an adviser to Iran’s Supreme Leader Ayatollah Ali Khamenei, had said in an NBC interview that the country would commit to never making nuclear weapons and get rid of its stockpiles of highly-enriched uranium.

BNP Paribas economist Paul Hollingsworth said the drop in oil compounded the deflationary pressures already in play in places like Europe where U.S. tariff worries are lingering.

"Everyone is finding it difficult to navigate the volatility in the announcements," Hollingsworth said.

In Europe, the continent-wide STOXX 600 index (.STOXX) rose 0.6%, recovering from earlier losses that were led by the energy sector. Most major regional indexes were higher.

April jobless figures were steady.

On Wall Street, the Dow Jones Industrial Average (.DJI) rose 271.69 points, or 0.65%, to 42,322.75, the S&P 500 (.SPX) rose 24.35 points, or 0.41%, to 5,916.93 and the Nasdaq Composite (.IXIC) fell 34.49 points, or 0.18%, to 19,112.32.

Retailer Walmart posted solid first-quarter sales numbers, but it became the latest to warn about the high costs of Trump's trade tariffs and did not provide second-quarter profit guidance due to the uncertainty.

"We may be entering a period of more frequent, and potentially more persistent, supply shocks," the Fed's Powell said.

Britain's economy grew by a quicker-than-expected 0.2% in March, data showed. Industrial production in the 20-nation euro zone also rose far more than predicted although overall first-quarter GDP growth disappointed.

The yield on the benchmark German 10-year Bunds fell 1.2 basis points to 2.614%.

Yields on benchmark U.S. 10-year notes fell 9.1 basis points to 4.437% amid worries that Trump's budget package would add trillions of dollars to the U.S. debt. Oil Prices Drop on US-Iran Progress; Global Shares Gain in Choppy Trade_1

Oil Prices Drop on US-Iran Progress; Global Shares Gain in Choppy Trade_1

DATA DELUGE

Investors were greeted with a plethora of good news earlier this week, from a U.S.-China trade-war truce to a raft of headline-grabbing investment deals from the Middle East during Trump's Gulf tour.

But most of the optimism had died down by Thursday, leaving MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) down 0.15%.

"We've had a huge party, everyone's hung over, and now we're just recuperating and waiting for the next big party," said Tony Sycamore, a market analyst at IG.

In currencies, the dollar was struggling to extend its strong gains made at the start of the week, with the dollar index down 0.2% against a basket of major currencies.

The euro edged higher.

Moves against the Korean won were particularly choppy for a second straight day, after news that South Korea's deputy finance minister Choi Ji-young met with Robert Kaproth, assistant secretary for international finance at the U.S. Treasury, to discuss the dollar/won market on May 5.

In commodities, U.S. gold futures settled 1.2% higher at $3,226.6.

Source: Reuters

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Russia-Ukraine Conflict

Political

Russia's Vladimir Putin spurned a challenge to meet face-to-face with Volodymyr Zelenskiy in Turkey on Thursday, instead sending a second-tier delegation to planned peace talks, while Ukraine's president said his defence minister would head up Kyiv's team.

They will be the first direct talks between the sides since March 2022, but hopes of a major breakthrough were further dented by U.S. President Donald Trump who said there would be no movement without a meeting between himself and Putin.

U.S. Secretary of State Marco Rubio later echoed that view, telling reporters in the Turkish resort of Antalya that Washington "didn't have high expectations" for the Ukraine talks in Istanbul.

Zelenskiy said Putin's decision not to attend but to send what he called a "decorative" line-up showed the Russian leader was not serious about ending the war. Russia accused Ukraine of trying "to put on a show" around the talks.

It was not clear when the talks would actually begin.

"We can't be running around the world looking for Putin," Zelenskiy said after meeting Turkish President Tayyip Erdogan in Ankara.

"I feel disrespect from Russia. No meeting time, no agenda, no high-level delegation - this is personal disrespect. To Erdogan, to Trump," Zelenskiy told reporters.

Zelenskiy said he himself would also not now go to Istanbul and that his team's mandate was to discuss a ceasefire.

Ukraine backs an immediate, unconditional 30-day ceasefire but Putin has said he first wants to start talks at which the details of such a truce could be discussed. More than three years after its full-scale invasion, Russia has the advantage on the battlefield and says Ukraine could use a pause in the war to call up extra troops and acquire more Western weapons.

Both Trump and Putin have said for months they are keen to meet each other, but no date has been set. Trump, after piling heavy pressure on Ukraine and clashing with Zelenskiy in the Oval Office in February, has lately expressed growing impatience that Putin may be "tapping me along".

"Nothing's going to happen until Putin and I get together," Trump told reporters aboard Air Force One.

Rubio, speaking in the Turkish resort of Antalya, later echoed that: "It's my assessment that I don't think we're going to have a breakthrough here until the President (Trump) and President Putin interact directly on this topic."

Referring to the current state of the talks as a "logjam", Rubio said he would travel to Istanbul to meet with Turkey's foreign minister and with Ukraine's delegation on Friday.

DIPLOMATIC CONFUSION

The diplomatic disarray was symptomatic of the deep hostility between the warring sides and the unpredictability injected by Trump, whose interventions since returning to the White House in January have often provoked dismay from Ukraine and its European allies.

While Zelenskiy waited in vain for Putin in Ankara, the Russian negotiating team sat in Istanbul with no one to talk to on the Ukrainian side. Some 200 reporters milled around near the Dolmabahce Palace on the Bosphorus that the Russians had specified as the talks venue.

The enemies have been wrestling for months over the logistics of ceasefires and peace talks while trying to show Trump they are serious about trying to end what he calls "this stupid war".

Hundreds of thousands have been killed and wounded on both sides in the deadliest conflict in Europe since World War Two. Washington has threatened repeatedly to abandon its mediation efforts unless there is clear progress.

Asked if Putin would join talks at some future point, Kremlin spokesman Dmitry Peskov said: "What kind of participation will be required further, at what level, it is too early to say now."

Russia said on Thursday its forces had captured two more settlements in Ukraine's Donetsk region. A spokeswoman for Russian Foreign Minister Sergei Lavrov pointedly reminded reporters of his comment last year that Ukraine was "getting smaller" in the absence of an agreement to stop fighting.

FIRST TALKS FOR THREE YEARS

Once they start, the talks will have to address a chasm between the two sides over a host of issues.

The Russian delegation is headed by presidential adviser Vladimir Medinsky, a former culture minister who has overseen the rewriting of history textbooks to reflect Moscow's narrative on the war. It includes a deputy defence minister, a deputy foreign minister and the head of military intelligence.

Key members of the team, including its leader, were also involved in the last direct peace talks in Istanbul in March 2022 - and Medinsky confirmed on Thursday that Russia saw the new talks as a resumption of those interrupted three years ago.

"The task of direct negotiations with the Ukrainian side is sooner or later to achieve long-term peace by eliminating the basic root causes of the conflict," said Medinsky.

The terms under discussion in 2022, when Ukraine was still reeling from Russia's initial invasion, would be deeply disadvantageous to Kyiv. They included a demand by Moscow for deep cuts to the size of Ukraine's military.

With Russian forces now in control of close to a fifth of Ukraine, Putin has held fast to his longstanding demands for Kyiv to cede territory, abandon its NATO membership ambitions and become a neutral country.

Ukraine rejects these terms as tantamount to capitulation, and is seeking guarantees of its future security from world powers, especially the United States.

Source: Reuters

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Stocks

UnitedHealth Group (UNH) stock fell as much as 17% Thursday and closed down over 11% lower, touching its lowest levels in five years and marking a more than 50% drop over the last month as negative headlines for the insurance giant continue to add up.

Thursday's plunge follows a new report in the Wall Street Journal released late Wednesday that said the company is facing a criminal investigation related to possible Medicare fraud.

In a statement on Wednesday, UnitedHealth called the story "deeply irresponsible," referring to a "supposed" investigation. UnitedHealth added in its statement that it stands by the integrity of its Medicare Advantage program.

On Tuesday, the company announced its former CEO, Stephen Hemsley, would replace Andrew Witty, who had been CEO since 2021, in a surprise move that sent shares of the company down nearly 20%. The company also pulled its 2025 forecast in making the executive change. UnitedHealth Stock Sinks, Touches 5-Year low After new Report Reveals Possible Medicare Fraud probe_1

UnitedHealth Stock Sinks, Touches 5-Year low After new Report Reveals Possible Medicare Fraud probe_1

Wall Street analysts said following the leadership and forecast announcements, the company is unlikely to receive the benefit of the doubt from investors until some semblance of stability can be offered.

Thursday's sharp reaction to the latest negative developments for the company is another case in point.

As Yahoo Finance's Anjalee Khemlani noted earlier this week, the company's challenges are many: increased costs, political pressure over its size, and scrutiny by the Federal Trade Commission and Department of Justice are all weighing on the business.

Congress has also put the spotlight on its market power as a large pharmacy benefits manager (PBM). Furthermore, the company has faced questions about its use of artificial intelligence in claims processing and a large cybersecurity attack on its Change Healthcare subsidiary.

The company also suffered significant public backlash following the killing of former executive Brian Thompson in December, and investors are suing the company for downplaying the impact of that tragedy. Questions about claim denials and fury about overall insurance industry practices were directed at UnitedHealthcare, UnitedHealth Group's health insurance business, in the aftermath of the killing.

Source: Yahoo Finance

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Central Bank

Forex

Federal Reserve Chairman Jerome Powell said Thursday that economic trends pointed to the possibility that the Fed will have to grapple with sudden shocks to the supply of goods and commodities in the coming years, which is a difficult challenge for the economy and the central bank.

On May 15th, Powell warned that longer-term interest rates were likely to be higher as the economy changed and policy was in flux. He noted that conditions had changed significantly over the past five years, during which the Fed witnessed a period of surging inflation, pushing it to historically aggressive interest rate hikes. The Fed Chair also said that even with longer-term inflation expectations largely aligning with the Fed’s 2% target, the era of near-zero rates was unlikely to return anytime soon.

Powell says the U.S. should expect volatile inflation going forward

According to Powell, higher real rates may reflect the possibility that inflation could be more volatile going forward than in the inter-crisis period of the 2010s. The Fed held its benchmark borrowing rate near zero for seven years following the financial crisis in 2008. However, the overnight lending rate has been in a range between 4.25%-4.5% since December 2024 and most recently trading at 4.33%.

The “supply shocks” remarks were similar to those Powell delivered over the past several weeks, cautioning that policy changes could put the Fed in a difficult balancing act between supporting employment and controlling inflation.

“In periods with larger, more frequent, or more disparate shocks, effective communication requires that we convey the uncertainty that surrounds our understanding of the economy and the outlook.” –Jerome Powell, Chairman of the Federal Reserve.

Powell’s remarks mirrored past concerns, indicating that changes in policy could put the Fed in a difficult balancing act between supporting employment and controlling inflation.

Powell warns tariffs could pose a challenge for the Fed

The central bank chief previously noted the likelihood that tariffs will slow growth and boost inflation, although he did not mention President Trump in his remarks. However, the extent of the impact was difficult to gauge, particularly as Trump recently backed off the more aggressive duties pending a 90-day negotiating window.

Powell said that while he expected higher inflation and lower growth, it was unclear where the Fed would need to devote greater focus as uncertainty over what impact President Donald Trump’s tariffs would have on the U.S economy continued to increase. He added that the Fed may find itself in a challenging scenario where its dual-mandate goals are in tension. If that were to occur, Powell said the Fed would consider how far the economy was from each goal and the potentially different time horizons over which those respective gaps would be anticipated to close.

The Fed Chair did not directly say where he saw interest rates headed, but he mentioned that the Fed was well-positioned to wait for greater clarity before considering any adjustments to its policy stance.

Powell also said tariffs were likely to move the Fed further away from its goals but noted that survey- and market-based measures of near-term inflation were on the rise, although the longer-term outlook remained close to the Fed’s 2% goal.

The Fed Chair claimed tariffs were highly likely to generate at least a temporary rise in inflation, and the inflationary effects could also be more persistent. He pointed out that avoiding such an outcome depended on the size of the effects, how long it took for them to pass through fully to prices, and on keeping longer-term inflation expectations well anchored.

Source: Cryptopolitan

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Cryptocurrency

Stocks

Coinbase's stock (COIN) fell by more than 8% Thursday after two developments that raised new questions about the company's controls and regulatory headaches.

First the US crypto exchange disclosed that cyber attackers had stolen sensitive customer data and threatened to publish it unless the company paid a $20 million ransom.

Then the New York Times reported that the Securities and Exchange Commission still has an open investigation into whether Coinbase misreported user data years ago.

Coinbase said no passwords or private crypto wallet codes had been compromised by the cyber attack and that the data leak affected less than 1% of Coinbase's monthly transacting customers, according to a blog post.

Separately, Coinbase's chief legal officer Paul Grewal told Yahoo Finance the SEC matter was "a holdover investigation from the prior administration about a metric we stopped reporting two and a half years ago” and that "we remain committed to working with the SEC to bring this matter to a close."

The two developments Thursday represented an unexpected setback for Coinbase, the largest US cryptocurrency exchange, following a series of wins this year as the crypto world gained deeper mainstream acceptance on Wall Street and in Washington, D.C.

Last week, the company announced a $2.9 billion acquisition of crypto options exchange Deribit. Earlier this week, Coinbase's stock soared after it was officially added to the S&P 500 index (^GSPC).

"Coinbase joining the S&P 500 means crypto's here to stay," Armstrong said in a Yahoo Finance interview on Capitol Hill Wednesday.

"It's going to be in everybody's 401(k). Everyone's going to have crypto exposure at least indirectly through Coinbase. And it's also a symbol that crypto is updating the financial system," Armstrong added.

On Thursday morning, Armstrong posted a video on X addressing the breach.

He explained that instead of paying the ransom, Coinbase is establishing a $20 million reward or bounty program for information leading to the arrest and conviction of the attackers. He also said the company is planning to reimburse customers affected by the incident.

"No, we're not going to pay your ransom," Coinbase CEO Brian Armstrong said.

"These attackers had been approaching our overseas customer support agents, looking for a weak link, someone to accept a bribe in exchange for sharing some customer information," Armstrong said.

A preliminary estimate of the cost for the incident is "approximately $180 million to $400 million," Coinbase said in a Thursday SEC filing. A spokesperson clarified that the cost is "mostly" for the bounty program and reimbursing affected customers.

The attackers gained control of customer information, including names, emails, physical addresses, phone numbers, and government identification details — including the last four digits of their Social Security numbers — along with some bank account identifiers and snapshots of customer balance data and transaction history.

The news that the SEC still has an open investigation into Coinbase reinforced that the company's regulatory troubles may not be over even after announcing in late February that the SEC had agreed to drop an enforcement case initiated by former SEC boss Gary Gensler.

Under Gensler, the agency had charged Coinbase with operating as an unregistered national securities exchange, broker, and clearing agency. President Trump replaced Gensler with cryptocurrency advocate Paul Atkins.

The outstanding SEC inquiry that remains open also began during the Biden administration, according to The New York Times. It centers on whether it misstated its "verified user" numbers in financial disclosures as far back as its initial filing to go public, according to the Times.

Coinbase stopped using the 'verified user' metric in 2023. "Based on our evaluation of our Verified Users metric, we do not believe this metric, which is an indicator of the scale of our platform, provides meaningful information related to our business performance," the company said in a February filing of that year.

Grewal, Coinbase's chief legal officer, said the metric was "fully disclosed to the public. We explained that the verified users metric includes anyone who verified their email address or phone number with us, so it may overstate the number of unique customers."

"We also disclosed — and continue to disclose — the more relevant metric of ‘monthly transacting users’ — the number of people who use our platform in a given month."

Source: Yahoo Finance

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Economic

Legendary investor Warren Buffett's leadership of Berkshire Hathaway (BRK.A, BRK.B), the struggling textile company he made into a trillion dollar conglomerate, will be a tough act to follow. But the “Oracle of Omaha” said his successor Greg Abel is ready for the challenge.

“He was already ready. I haven’t taught him anything,” Buffett told the Wall Street Journal in an interview in which he called Abel a "natural" and praised the vice chair's skills, according to reports Wednesday.

While Buffett lauded Abel's energy and business acumen in his role overseeing Berkshire's noninsurance subsidiaries, he also said Abel is a successful investor, who "will have ideas about where money should be invested," amid speculation about how Berkshire's record $347.7 billion cash pile could be deployed.

“Really great talent is rare,” Buffett reportedly said. “It’s rare in business. It’s rare in capital allocation. It’s rare in almost every human activity you can name," he said, adding that “the more years that Berkshire gets out of Greg, the better.”

Berkshire's Stock Has Outperformed Broader Market, Despite Hit After Buffett Said He Will Step Down

Earlier this month, Buffett stunned attendees at Berkshire’s annual shareholder meeting—including Abel, who was sitting beside Buffett on stage—when the CEO of 60 years announced Abel would assume the role at year-end.

But it was a decision that many Berkshire investors anticipated would come soon, after the 94-year-old Buffett warned in February that "it won’t be long before Greg Abel replaces me as CEO." The 62-year-old Abel has been with the company for 25 years, and has a strong track record leading the company's energy and railroad businesses.

"I think the prospects of Berkshire will be better under Greg’s management than mine," Buffett told investors at the event, adding that he has no plans of selling his shares. Buffett will remain chair of Berkshire's board after he steps down as CEO.

Shares of Berkshire have taken a hit in the wake of the announcement, though they’ve still outperformed the broader market, with shares up about 11% since the start of the year, while the S&P 500 barely edged back into positive territory yesterday.

Abel Is Expected to Follow Buffett's Investment Principles and Approach

"We believe Abel is a great operator and has already helped improve some of BRK's businesses," UBS analysts told clients in a note last week, adding they "expect little change at BRK and the culture/strategy to remain unchanged under Abel."

Abel has said he aims to continue the investment philosophy and values that have guided Berkshire under Buffett, telling investors at the annual shareholder meeting, “it will not change, and it’s the approach we’ll take as we go forward.”

Source: finance.yahoo

To stay updated on all economic events of today, please check out our Economic calendar

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Manuel

Economic

China–U.S. Trade War

A key indicator of the impact of tariffs on the economy isn’t flashing warning signs yet, as retail sales growth continued in April.

While slower than March’s surge, retail sales increased by 0.1% in April. The measure of sales at retail stores was in line with estimates of economists surveyed by The Wall Street Journal and Dow Jones Newswires. Last month’s sales growth figures were revised upward to reflect 1.7% growth, as shoppers rushed to purchase items ahead of potential U.S. tariffs.

“[April's 0.1% growth] is much more impressive than it sounds, as it means March's huge gains were maintained,” wrote Moody’s Economist Scott Hoyt.

Retail Sales in Focus Amid Tariff Tussle

Economists are watching retail sales as an important signal on whether consumer fears about President Donald Trump’s tariffs are making them hesitant to spend money.

So far, poor consumer sentiment surveys haven’t resulted in a meaningful decline in spending, mainly as people rush to buy items before tariffs raise prices. However, economists still expect a slowdown as tariffs work through the economy.

“Going forward, we anticipate further weakness in consumer spending as pay back from the front-loading of consumption ahead of the tariffs, higher tariff-induced prices, high borrowing rates, and a softening in employment gains that will weigh on aggregate income gains for households,” Nationwide Chief Economist Kathy Bostjancic said.

Consumer spending powers the economy, representing about two-thirds of the U.S. economy, with goods purchases making up about a third of spending levels. Retail sales, in particular, can illuminate tariffs’ impact on consumers because they reflect spending on goods like cars, building supplies, sporting goods, and toys. Many items tracked by the measure are manufactured in foreign countries and subjected to import taxes.

“The retail sales figures in the coming months take on additional importance as they serve as a harbinger of the impact of tariffs on the broader economy,” Wells Fargo economists wrote.