Global markets traded unevenly on Friday as renewed clashes between U.S. and Iranian forces near the Strait of Hormuz weighed on investor sentiment and pressured equities worldwide.
“Markets still aren’t pricing in the worst-case scenario,” Deutsche Bank strategists led by Henry Allen wrote in their morning note to clients.
Investors were also monitoring preparations for President Donald Trump’s upcoming summit with China, while a fresh batch of software earnings triggered sharp premarket swings across the technology sector. Attention later in the session will shift toward the release of the April U.S. employment report.
Oil reverses gains after Strait of Hormuz tensions flare
Oil prices turned lower on Friday after an initial rally sparked by renewed military exchanges involving U.S. and Iranian forces near the Strait of Hormuz. Brent crude briefly climbed around 3% during Asian trading before surrendering those gains and slipping back below the $100 level.
The renewed tensions unsettled markets only days after signals from Washington and Tehran suggested that a broader diplomatic agreement could be within reach.
President Donald Trump maintained that the ceasefire established last month was still holding despite the latest exchange of fire. Even with Friday’s volatility, crude prices remain on track for an approximate 7% weekly decline as traders continue to hope for a diplomatic resolution.
Trump-China summit draws market attention
Geopolitical developments remained a central focus ahead of Trump’s expected meeting with Chinese President Xi Jinping next week in Beijing.
The summit would represent the first visit by a U.S. president to China since 2017 and arrives during a particularly sensitive period for financial markets. Discussions are expected to center on the Iran conflict, trade relations and broader economic coordination.
According to CNBC, the American business delegation accompanying Trump may be smaller than those sent by several other countries in recent months. Investors are also looking for indications regarding a possible future trip by Xi to the United States.
Asian and European equities move lower
Asian stock markets weakened after Wall Street retreated from record highs overnight. Japanese and South Korean equities pulled back as rising geopolitical tensions in the Middle East reduced investor appetite for risk.
Japan’s Nikkei 225 ended the session down 0.2%, while South Korea’s KOSPI recovered from earlier losses to close slightly higher.
European markets also traded lower, with the STOXX 600 falling as much as 0.9% in early dealings after the U.S. military reported intercepting attacks aimed at three warships near the Strait of Hormuz.
Despite the broader caution, U.S. equity futures pointed modestly higher ahead of the labor market report, with S&P 500 futures gaining around 0.3%.
Investors await U.S. jobs report
Market participants are closely watching Friday’s U.S. nonfarm payrolls report for additional signals on economic conditions and the Federal Reserve’s next policy moves.
The previous month’s payrolls data showed job growth of 178,000, 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 are now forecasting that payrolls increased by 50,000 in April, which would mark the first consecutive monthly gains since May of last year. The unemployment rate is expected to remain unchanged at 4.3%.
Software earnings trigger major stock swings
Corporate earnings from software companies drove some of the sharpest individual stock movements ahead of Friday’s opening bell.
Akamai (NASDAQ:AKAM) jumped nearly 30% in premarket trading after announcing a $1.8 billion long-term cloud agreement linked to a frontier artificial intelligence model provider.
Bill Holdings (NYSE:BILL) advanced 12% after reporting quarterly revenue and earnings above analyst expectations, supported by stronger transaction activity and subscriber-related fees.
Several other software stocks moved sharply lower following their earnings releases. HubSpot (NYSE:HUBS), Trade Desk (NASDAQ:TTD) and Cloudflare (NASDAQ:NET) all recorded double-digit declines in premarket trading.