Oil prices climbed in early Asian trading on Friday and U.S. stock futures moved slightly lower after a fresh exchange of strikes between the United States and Iran raised questions about the durability of a month-long ceasefire in the Middle East.
U.S. crude futures, which had been down for the week, surged more than 2% from Thursday's settlement to trade at $96.8 a barrel. S&P 500 futures eased by roughly 0.2%, while Nikkei futures signalled a marginally lower open for Japanese equities after the local market had risen to record highs on Thursday.
Iran’s top joint military command reported that U.S. forces targeted an Iranian oil tanker and another vessel as they entered the Strait of Hormuz. The U.S. military said its actions were in self-defence following attacks on Navy destroyers transiting the strait, and added that no U.S. assets were struck in the incident. Separately, U.S. President Donald Trump told ABC News that the ceasefire with Iran remained in place.
The military actions took place while Washington awaited a response from Tehran to a U.S. proposal designed to pause direct combat but leave the most contentious issues, including Iran’s nuclear programme, unresolved for the time being.
In currency markets, the escalation nudged the dollar up from its recent lows and set it on track to finish the week largely steady. The Japanese yen continued to struggle to break through the 155-per-dollar level despite data indicating that Tokyo authorities may have intervened in currency markets this week and last, potentially selling as much as $67 billion in defence of the yen.
At the time of the session, the yen was trading at 156.88 per dollar while the euro stood at $1.1726.
Market participants will also be watching for comments from U.S. Treasury Secretary Scott Bessent during his visit to Tokyo next week, given his prior statements in favour of faster rate rises in Japan. Any remarks on the yen or Japanese monetary policy could draw investor attention.
Separately, investors were preparing for the U.S. non-farm payrolls report due on Friday. A Reuters survey of economists indicated consensus expectations that employment increased by 62,000 in April, following a rebound of 178,000 in March.
What this means for markets
- Energy markets: Renewed military activity near the Strait of Hormuz lifted crude prices amid concerns about supply disruption risk.
- Equities: Risk-sensitive assets, notably U.S. equity futures, displayed modest weakness as geopolitical uncertainty increased.
- Foreign exchange and sovereign bonds: The dollar firmed from recent lows while the yen remained under pressure despite reported large-scale intervention by Japanese authorities.