Asian equities fell on Friday, putting markets on track for their worst week in six years, as the protracted Middle East conflict and renewed Iranian strikes drove a broad risk selloff. Oil dropped. Friday's 1.1% decline in the MSCI Asia Pacific Index brought the gauge's loss to 7.5% since the war began. Treasuries held this week's losses, while the dollar edged lower, but it was still headed for its best week since 2024.
Attention was mostly on oil, with Brent crude dropping 2.3% to $83.46 a barrel on Friday. That came after the Trump administration was weighing a range of options for addressing the spike in oil and gasoline prices amid the war in Iran, Interior Secretary Doug Burgum said. Even so, the commodity headed for the biggest weekly gain since 2022.
The US-Israeli offensive against Iran has rattled energy markets, driving crude oil to multi-year highs on fears that disruptions in the Strait of Hormuz may choke supplies and reignite inflation. That came as equity investors confront stretched valuations after an artificial intelligence-fueled rally pushed stocks to elevated levels.
Vessel movements in Strait of Hormuz
Photo Credit: Bloomberg
"What matters now is whether the war will last days, weeks, or longer," said Marco Oviedo, senior strategist at XP Investimentos. The possibility that the conflict doesn't last long "remains the base case, and that the US is winning the battle. But Iran's refusal to back down is keeping things tense," he said.
Iran launched a fresh wave of missile and drone strikes across the Gulf on Thursday evening, with attacks reported in the United Arab Emirates, Bahrain, Qatar and Kuwait. Iranian Foreign Minister Abbas Araghchi told NBC News that his country hadn't asked for a ceasefire and had no intention of negotiating.
The US also remained defiant. Trump told Axios he should be involved in selecting Iran's next leader, the outlet reported, citing an interview with the president.
Meanwhile, the US issued a general license to allow for some Russian oil sales to India, giving the Asian nation more options to purchase fuel as the war on Iran leads to a spike in global prices.
What Bloomberg strategists say...
Equities are on the back foot again, and the driver is straightforward: oil. Cross-asset price action is consolidating around a single axis, with crude's advance dictating direction pretty much everywhere.
- Brendan Fagan, Macro strategist.
Higher oil prices raised the risk of another breakdown in stock-bond correlations, but bonds can still diversify equity risk, according to Morgan Stanley strategists including Serena Tang.
"If a sustained oil shock could push growth lower and inflation higher, we may see a repeat of the 2021-2023 environment when stocks and bonds sold off together," they said.
Attention later will shift to the US payrolls report. Before that, data showed jobless claims are settling near some of the lowest levels in the last year amid a low-firing environment.
The employment report due Friday is expected to show hiring moderated last month after a strong reading in January, and unemployment held steady.
"The stronger the better given the increase in inflation expectations due to energy prices," the JPMorgan Market Intelligence desk led by Andrew Tyler said. "A weaker number will increase rate cut expectations, but the risk is stagflation in the near term."
Corporate Highlights:
- Oracle Corp. is planning to ax thousands of jobs among its moves to handle a cash crunch from a massive AI data center expansion effort.
- Marvell Technology shares are up 10% in extended trading after the chipmaker's first-quarter outlook was stronger than expected.
- Nvidia Corp. shares managed a minor gain despite a gauge of semiconductor shares dropping 1.2% as the US considered requiring permits for artificial-intelligence chip sales.
- Broadcom Inc. Chief Executive Officer Hock Tan said the company expects its AI chip sales to top $100 billion next year.
- Berkshire Hathaway Inc. CEO Greg Abel said he will use all of his take-home pay to acquire the conglomerate's stock for as long as he's in the role.
- Baker Hughes Co. priced $10 billion of dollar and euro bonds to help fund its acquisition of Chart Industries Inc.
Some of the main moves in markets:
Stocks
- S&P 500 futures were little changed as of 10:21 a.m. Tokyo time
- Japan's Topix fell 0.8%
- Australia's S&P/ASX 200 fell 1.3%
- Hong Kong's Hang Seng rose 0.1%
- The Shanghai Composite rose 0.6%
- Euro Stoxx 50 futures rose 0.6%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.1615
- The Japanese yen was little changed at 157.50 per dollar
- The offshore yuan was little changed at 6.9133 per dollar
Cryptocurrencies
- Bitcoin fell 0.4% to $70,886.32
- Ether fell 0.2% to $2,077.31
Bonds
- The yield on 10-year Treasuries was little changed at 4.14%
- Japan's 10-year yield was unchanged at 2.155%
- Australia's 10-year yield advanced five basis points to 4.84%
Commodities
- West Texas Intermediate crude fell 2.5% to $78.96 a barrel
- Spot gold rose 0.1% to $5,088.14 an ounce
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
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