The MSCI Asia Pacific Index rose 0.3% after losing 2.6% in the last session, when strikes on energy assets in the Middle East stoked concerns of a prolonged economic impact from the war. S&P 500 futures also gained after the underlying benchmark finished the last session down 0.3%, recovering from a 1% drop. Brent opened lower on Friday. Japanese markets are closed for a holiday, meaning there will be no cash trading in Treasuries during Asian hours.
US stocks pared losses as Israeli Prime Minister Benjamin Netanyahu said the war will end a lot faster than people think as Iran is no longer able to enrich uranium or manufacture ballistic missiles. He also said Israel will no longer target energy infrastructure. President Donald Trump told reporters he’s “not putting troops anywhere” after being asked about the possibility of deploying US ground troops.
Traders are parsing every geopolitical headline for indications on how long the war in Iran will last and whether tensions will continue to escalate from here. Treasury Secretary Scott Bessent noted the US is looking to remove sanctions that it has long imposed on Iranian oil in an effort to lower surging energy prices. The White House doesn’t plan to ban the export of oil and gas, an official said Thursday.
“The market is looking for an off-ramp, the market is looking for a ceasefire,” Bank of America strategist Michael Hartnett said in an interview on Bloomberg Television. Financial conditions have been tightening, but the Federal Reserve finds it tough to address the squeeze if oil prices are high, he added.
Meanwhile, yields on Australian and New Zealand government bonds climbed on Friday as investors in debt markets around the world rushed to bet on higher interest rates amid concerns the surge in oil prices since the war broke out will deliver an inflation shock.UK’s two-year rate jumped as much as 40 basis points to 4.49% after the Bank of England on Thursday said it “stands ready” to act to prevent inflation from accelerating. Treasuries rebounded from their worst point of the session, with the US 10-year yield falling two basis points to 4.25%. However, the policy-sensitive two-year yield rose two basis points to 3.79%.As the war reduces prospects for a US interest-rate cut in the near term, gold is heading for the biggest weekly loss in six years. The precious metal — widely viewed as a haven — has dropped every week since the US and Israel attacked Iran last month.
Three weeks of conflict have upended the energy supply chain. With the Strait of Hormuz all but closed, gasoline and jet fuel prices are surging, cooking gas shortages are triggering fistfights in India and farmers are fretting about diesel and fertilizers.
In Asia Friday, data set for release includes one-year and five-year loan prime rates in China, export orders for Taiwan and inflation for Hong Kong.
