Monaco Journal - Stocks diverge, oil rises as fresh US-Iran clashes hit peace hopes

Global equities enjoyed a strong run this week -- with Wall Street setting fresh record highs -- while oil prices fell sharply on optimism that the 10-week conflict will soon be over.

However, the risk-on mood has been tempered by US strikes on Iranian military targets after an attack on three American destroyers in the strait.

"Once again, the news flow on the geopolitical front has shown that the path towards a lasting agreement is anything but linear," said analyst Chris Weston at financial group Pepperstone.

He added that "traders have had to rethink the assumptions on the trajectory of the conflict."

Wall Street stocks nevertheless pushed higher after data showed the US economy added 115,000 jobs in April, more than double the forecast.

US job growth has been see-sawing between expansion and contraction for the last year, sparking concerns about the health of the world's largest economy.

Briefing.com analyst Patrick O'Hare put the rise down to a "buy-the-dip" mentality after yesterday's losses more than the jobs numbers, which he said overall were not that strong.

He pointed to data showing average hourly earnings were up only 0.1 percentage point above the PCE Price Index, the US Federal Reserve's preferred measure of inflation.

"That doesn't provide a lot of discretionary spending cushion without taking on debt or dipping into savings," he noted.

eToro US Investment Analyst Bret Kenwell noted that if the labour market and broader economy continue to hold up as rising energy prices push up inflation, the Fed will have less justification to cut interest rates.

"In other words, good news may actually be good news again -- just not for investors hoping the Fed rides in with quick rate cuts," he said.

Investors often consider bad economic news to be good news in the sense it increases chances of interest rate cuts.

The dollar retreated against its main rivals.

Europe's main stock markets finished the day lower.

- Pound holds up -

The British pound held up as Keir Starmer vowed to carry on as UK prime minister after his Labour party suffered big losses to the hard-right in local elections.

Critics say Starmer has swerved from one policy misstep to another, and he has been embroiled in a scandal over Peter Mandelson, who was sacked as ambassador to Washington over his links to US sex offender Jeffrey Epstein.

The prime minister has also failed to fulfil his main promise of spurring economic growth, with impatient Britons still suffering a cost-of-living crisis, including from high energy prices.

Elsewhere on Friday, the yen firmed after Japanese media reported that authorities had spent around $64 billion since last week propping up the currency.

The market interventions reportedly began on April 30 when the yen weakened to near 160 per dollar, the lowest in almost two years.

Since then there have been several spikes in the value of the Japanese currency, sparking speculation of further moves by the government.

- Key figures at around 1530 GMT -

Brent North Sea Crude: UP 1.9 percent at $101.99 a barrel

West Texas Intermediate: UP 1.1 percent at $95.84 a barrel

New York - DOW: FLAT at 49,602.68 points

New York - S&P 500: UP 0.7 percent at 7,391.66

New York - Nasdaq Composite: UP 1.3 percent at 26,144.96

London - FTSE 100: DOWN 0.4 percent at 10,233.07 (close)

Paris - CAC 40: DOWN 1.1 percent at 8,112.57 (close)

Frankfurt - DAX: DOWN 1.3 percent at 24,338.63 (close)

Tokyo - Nikkei 225: DOWN 0.2 percent at 62,713.67 (close)

Hong Kong - Hang Seng Index: DOWN 0.9 percent at 26,393.71 (close)

Shanghai - Composite: FLAT at 4,179.95 (close)

Euro/dollar: UP at $1.1773 from $1.1746 on Thursday

Pound/dollar: UP at $1.3626 from $1.3576

Dollar/yen: DOWN at 156.62 yen from 156.83 yen

Euro/pound: DOWN at 86.39 pence from 86.52 pence

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E.Fournier--MJ