Global Markets Retreat as Middle East Risks Reignite
Global equities slipped on Friday as renewed geopolitical tensions in the Middle East weighed on investor sentiment, while crude oil prices advanced amid fresh concerns over supply disruptions around the Strait of Hormuz.
The MSCI All Country World Index declined 0.3%, with Asian equities falling 1.1% after Wall Street pulled back from recent record highs. Despite the risk-off tone, Asian markets still remained on track for a fifth consecutive week of gains — the longest winning streak since January. Meanwhile, S&P 500 futures edged 0.2% higher, suggesting investors continue to expect resilience in the broader U.S. economy.
Market focus sharply returned to the Gulf region after Iranian state-linked media reported the seizure of oil tanker Ocean Koi, while military tensions intensified around the Strait of Hormuz. The U.S. military confirmed that Iranian forces launched attacks against American naval destroyers transiting the area, prompting retaliatory strikes against Iranian-linked military targets. President Donald Trump stated that the three U.S. destroyers passed safely through the Strait despite coming under fire, while Iranian media claimed missile and drone strikes targeted the vessels.
Although both Washington and Tehran signaled that ceasefire discussions remain active, traders remained cautious as the latest developments threatened to destabilize the fragile truce that had recently supported risk assets. Oil prices gained as investors priced in the possibility of further disruptions to global energy flows through one of the world’s most strategic shipping lanes.
In Europe, political uncertainty also entered the spotlight after UK Prime Minister Keir Starmer described local election results as “very tough,” though he indicated he intends to remain in office. Investors are closely monitoring the Pound and UK government bonds amid concerns over political stability and future fiscal direction.
Economic data from Germany added further pressure on European sentiment. German Industrial Production contracted by 0.7% month-over-month and fell 2.8% annually, both weaker than expectations, reinforcing concerns over slowing industrial momentum within Europe’s largest economy.
In fixed income markets, the U.S. 10-year Treasury yield held near 4.39% as elevated oil prices continued to fuel inflation concerns. Gold prices also moved higher as investors sought defensive assets amid geopolitical uncertainty.
Elsewhere, Japanese real wages rose for a third straight month in March, supporting expectations that the Bank of Japan may continue normalizing monetary policy. In the United States, a federal trade court ruled against President Trump’s 10% global tariff policy, delivering another legal setback to the administration’s trade agenda.
Federal Reserve officials also remained in focus after Boston Fed President Susan Collins signaled support for policymakers who opposed recent wording suggesting future rate cuts, highlighting continued divisions within the Fed over the monetary policy outlook.
By Amir Amidian
Senior Market Analyst | Zylostar
