What the rise in swap rates show more than anything else is heightened risk aversion and the damage done to rate cut expectations by the abrupt ratcheting up of tensions in the Middle East. On Friday, the one-year Overnight Index Swap (OIS) rate climbed 5 basis points to a high of 6.93%, having registered a rise of 14 basis points since April 5 and more than 30 basis points from February 2.
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US equities sold off sharply on Friday, sending tech stocks to the biggest weekly loss in 17 months, due to tensions in the Middle East and worries over the outlook for interest rates. The S&P 500 index closed down 0.9%, dropping for the sixth straight session and the third straight week, leaving it more than 5% below its March 28 closing high. The Nasdaq 100 declined 2.1%.
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India's key indices closed firm after a rollercoaster ride on Friday, snapping a four-day losing streak, as traders covered bearish bets on expectations that the Israel-Iran conflict may recede, while the rupee recovered on likely dollar sales by the Reserve Bank of India. Oil prices slid after surging in early trade, while the continued appetite for safe-haven assets kept gold prices high.
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