Global financial markets traded cautiously on Friday as renewed military tensions between the United States and Iran near the Strait of Hormuz pressured equities and kept investors focused on geopolitical risks.
“Markets still aren’t pricing in the worst-case scenario,” Deutsche Bank strategists led by Henry Allen wrote in their morning note to clients.
Traders were also closely monitoring preparations for President Donald Trump’s upcoming summit with China, while another round of software company earnings sparked major premarket volatility across the technology sector. Later in the day, attention will turn to the release of the April U.S. employment report.
Oil prices reverse course after early surge
Oil prices moved lower on Friday after initially rallying following renewed clashes involving U.S. and Iranian forces near the Strait of Hormuz. Brent crude briefly climbed roughly 3% during Asian trading hours before giving back those gains and falling back below the $100 per barrel mark.
The escalation unsettled investors just days after signs emerged that Washington and Tehran could be approaching a broader diplomatic agreement.
President Donald Trump said the ceasefire established last month remained in place despite the latest military exchanges. Even with Friday’s turbulence, crude prices are still heading toward an estimated weekly decline of around 7% as hopes for diplomacy continue to support market expectations.
Trump-Xi meeting remains in focus
Geopolitical developments remained a key theme ahead of Trump’s planned meeting with Chinese President Xi Jinping in Beijing next week.
The summit would mark the first visit by a sitting U.S. president to China since 2017 and comes at a particularly delicate moment for global investors. Talks are expected to focus on the Iran conflict, trade relations and broader economic cooperation.
CNBC reported that the American business delegation accompanying Trump could be smaller than those sent by several other countries in recent months. Investors are also looking for further details regarding a possible future visit by Xi to the United States.
Asian and European markets retreat
Asian stock markets weakened after Wall Street pulled back from record levels overnight. Japanese and South Korean equities retreated as renewed tensions in the Middle East dampened investor appetite for risk assets.
Japan’s Nikkei 225 finished the session down 0.2%, while South Korea’s KOSPI recovered from earlier declines to close modestly higher.
European equities also moved lower, with the STOXX 600 dropping as much as 0.9% in early trading after the U.S. military said it had intercepted attacks targeting three naval vessels near the Strait of Hormuz.
Despite the cautious tone across global markets, U.S. stock futures pointed slightly higher ahead of the labor market data, with S&P 500 futures rising around 0.3%.
Investors await key U.S. labor data
Market participants are now focused on Friday’s U.S. nonfarm payrolls report for fresh insight into the strength of the economy and the Federal Reserve’s future interest rate path.
Last month’s payroll report showed job creation of 178,000 positions, marking the strongest reading in 15 months.
“That’s an important one, as Fed pricing has already shifted in a hawkish direction given the energy shock,” Allen said.
Economists currently expect payroll growth of 50,000 jobs in April, which would represent the first consecutive monthly increase since May of last year. The unemployment rate is forecast to remain unchanged at 4.3%.
Software earnings spark sharp stock moves
Quarterly earnings from software companies generated some of the largest individual stock swings ahead of Friday’s opening bell.
Akamai (NASDAQ:AKAM) surged nearly 30% in premarket trading after announcing a $1.8 billion long-term cloud services agreement tied to a frontier artificial intelligence model provider.
Bill Holdings (NYSE:BILL) climbed 12% after posting quarterly revenue and earnings above analyst expectations, supported by stronger transaction volumes and subscriber-related fees.
Meanwhile, several other software companies came under heavy pressure following their earnings releases. HubSpot (NYSE:HUBS), Trade Desk (NASDAQ:TTD) and Cloudflare (NASDAQ:NET) all posted double-digit losses in premarket trading.
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