Oil past $100 keeps rates on hold as the AI trade wobbles

The war in the oil price

Oil passed $100 a barrel again on Thursday as the conflict in the Middle East escalated, and shares slid with it. The Guardian reported crude back above the threshold and equity markets under pressure through the session, a move that fed directly into the day's central bank news.

The European Central Bank left interest rates unchanged, citing inflation driven by the Iran war. DW carried the decision, framing it around energy costs the bank cannot easily look through. In the United Kingdom, City A.M. reported that the 'door is open' to a rate rise as inflation fears returned, language that would have been hard to imagine a few months ago.

The strain reached corporate results. EasyJet, described by This is Money as a takeover target, saw profits tumble on higher fuel prices. The Guardian put the fall at 70 per cent, tying it squarely to fuel costs that soared amid the Iran war. Emirates NBD, reported by the WSJ, held its profit steady even as the UAE economy faced war disruptions.

Gold, often a refuge in such weeks, went the other way. The WSJ reported it declining on a stronger dollar and the prospect of a Federal Reserve rate rise.

Yields up, mortgages with them

The bond market did the rest of the tightening. The WSJ reported the 10-year Treasury yield rising to its highest level since January 2025, with Japanese government bonds falling in step. A companion piece set out what surging yields mean for consumers and markets, from borrowing costs to the price of everything financed with debt.

In Britain the effect was already visible. The BBC reported UK mortgage rates rising to their highest level for a month.

City A.M. ran a beginner's guide to appeasing the bond market, pitched at a new chancellor, explaining why the cost of government borrowing matters when yields climb. The bond market, in short, was setting the terms this week rather than following them.

Spending that spooked the tech trade

The other big move came from technology. The BBC reported Google and Tesla shares plunging as AI spending rattled markets, and City A.M. wrote that AI spending overshadowed earnings beats at both Alphabet and Tesla. The results were good; the capital budgets were what investors fixed on.

The WSJ captured the split in two headlines. One argued that the latest earnings showed 'AI is not just hype', with the Nikkei falling 2.3 per cent as tech and chip stocks dragged. The other reported investors zeroing in on runaway tech spending, putting a dent in the AI trade. The WSJ's market wrap had the tech selloff deepening as oil hit $100, so the two stories of the day met in the same tape.

Elsewhere in the sector, the WSJ reported that Google disclosed $94.1 billion in SpaceX stock, marking a 6 per cent stake. Blackstone, meanwhile, reported a profit surge that the WSJ attributed to its AI investments — the same theme read as a gain rather than a worry.

Washington widens the tariff net

Overnight the United States imposed fresh tariffs on more than 80 countries. The BBC, the Guardian, Euronews and CNBC all reported the measures, which cited forced labour concerns as their justification.

CNBC noted the rebukes from trade partners over that forced-labour framing, and the Guardian reported protests from US allies as well as other trading partners. The Guardian also published a guide to what the tariffs cover and how they are structured.

Separately, the Guardian reported Democratic lawmakers proposing a bank funded by China tariffs to boost US manufacturing — a sign of how far the revenue from trade barriers is now being spoken for before it arrives. Between the oil price, the bond market and the tariff list, the week gave central banks little room and investors plenty to weigh.