A selloff on Wall Street extended to Asia as traders stayed cautious even after President Donald Trump again delayed his deadline for Iran to reach a deal. Crude oil slipped. Asian shares fell over 1% after both US benchmarks slid to the lowest level since September on Thursday. Technology stocks continued their selloff with South Korea — a poster child for artificial intelligence investments — slumping 4.1%.
Sentiment had improved at the start of Friday with Brent crude falling as much as 2% and US equity-index futures rising 0.5% following Trump's 10-day extension to the deadline for Iran to strike a deal with the US or face more attacks. Those gains pared after the Wall Street Journal reported the Pentagon is looking at sending up to 10,000 additional ground troops to the Middle East.
Brent was just 0.8% down, trading around $107 a barrel and US equity-index futures pared gains to around 0.2%. The commodity, which has stayed volatile this week with losses typically followed by gains the following day, is still up more than 70% this year.
The moves extend a month of war-driven swings, underscoring how geopolitical tensions continue to buffet markets, leaving investors uncertain whether hostilities are set to ease or escalate. Traders are closely watching the Strait of Hormuz, a key waterway for Middle East oil flows that remains effectively shut, driving crude oil higher and adding to inflation pressures.
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“By extending the deadline, it effectively kicks the can down the road, pushing back any concrete resolution regarding the reopening of the Strait of Hormuz,” Tony Sycamore, a market analyst at IG Australia, wrote in a note. “This, in turn, simply extends the uncertainty weighing on markets and the broader global economy.”
Trump again pushed back his deadline for Iran, saying talks with the country were going “very well.” The US president said he would also extend his pledge to refrain from attacks on Iranian energy sites, offering a brief calm to global energy markets jolted by the conflict.
Earlier, Trump had threatened Iran with intensified military action after Tehran rejected Washington's push for a peace deal, with the two sides far apart in efforts to end the war. Until Iran agree to stop the conflict, the US will “keep blowing them away,” the American president said.
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Iran responded to the ceasefire proposal through intermediaries, the semi-official Tasnim news agency reported, and is now awaiting a reply. Tehran has a string of conditions for ending the conflict, one of which is a guarantee that the US and Israel won't resume their attacks.
The markets were caught off guard by the initial US and Israeli strikes at the end of February, which came in the middle of talks that were ostensibly going well but were accompanied by a huge US military build up in the Middle East, Kyle Rodda at Capital.com wrote in a note.
“The current situation looks very similar, with markets positioning for a potential weekend escalation,” he wrote.
In other corners of the market, a Bloomberg gauge of the dollar edged 0.1% lower on Friday, while gold advanced. The yen held its losses from the previous session, trading around 159.65 a dollar. Bitcoin edged lower, trading below $69,000.
Meanwhile, Treasury Secretary Scott Bessent said a US insurance program meant to boost shipping through the Strait will begin soon, a move that may help revive flows of much of the world's oil and gas supplies.
The conflicting messages about the Middle East have kept traders cautious even as energy prices have surged since the US and Israel began a bombing campaign in Iran almost a month ago.
Brent, the global crude benchmark is on pace for a monthly gain of almost 50% as the conflict engulfs the energy-rich Middle East and sends shockwaves through the global economy. The near-total closure of Hormuz has meant millions of barrels of lost daily oil output, while supercharging product prices from diesel to jet fuel.
“The war in Iran and the resulting surge in oil prices continue to dampen risk appetite,” said Adam Turnquist at LPL Financial. “Any sustainable market recovery will require meaningful progress toward a peace agreement and a reopening of the Strait of Hormuz.”
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.1% as of 9:45 a.m. Tokyo time
- Hang Seng futures were little changed
- Japan's Topix fell 1.1%
- Australia's S&P/ASX 200 fell 0.8%
- Euro Stoxx 50 futures were little changed
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.1526
- The Japanese yen was little changed at 159.70 per dollar
- The offshore yuan was little changed at 6.9208 per dollar
- The Australian dollar fell 0.1% to $0.6876
Cryptocurrencies
- Bitcoin fell 0.5% to $68,622.49
- Ether fell 0.2% to $2,059.86
Bonds
- The yield on 10-year Treasuries was little changed at 4.42%
- Japan's 10-year yield advanced 3.5 basis points to 2.310%
- Australia's 10-year yield advanced six basis points to 5.07%
Commodities
- West Texas Intermediate crude fell 0.7% to $93.84 a barrel
- Spot gold rose 0.2% to $4,386.65 an ounce
ALSO READ: Wall Street Highlights: S&P 500 Falls The Most Since Iran War Began On Ceasefire Doubts
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