Global stocks are mixed on Friday, amid intensifying fears of a military confrontation in the Middle East. The oil and gas stocks led the gains after the Brent crude edged toward 65 USD per barrel, amid fears the US may launch a military attack on Iran that would disrupt Middle Eastern oil exports.
Market focus is largely attuned to the simmering geopolitical tensions between the US and Iran. It comes after the New York Times reported late Thursday that President Donald Trump approved military strikes on several Iranian targets, but abruptly pulled back from launching the attacks.
The US officials said Thursday that an Iranian missile had shot down an unmanned surveillance drone over the Strait of Hormuz, a shipping route through which much of the world’s oil flows. Iran claimed that the drone was above its territory. The risk of conflict between Washington and Tehran has been rising since the Trump administration’s decision to withdraw from the 2015 Iran nuclear agreement.
Asian markets recap
Most of the Asia-Pacific stock indexes ended the last trading session of the week with declined amid the growing geopolitical tensions over the US-Iran tensions.
In China, the mainland index Shanghai Composite advanced by 0.30% to 2,996.02 points. Hong Kong’s benchmark Hang Seng was down by 137.18 points, or 0.48%, ending the day at 28,413.25 points. The stocks of HSBC traded on the Hong Kong stock exchange declined by 0.84%.
The blue-chip index of the Tokyo Stock Exchange, Nikkei 225, reported a decline of 204.22 points, or 0.95%, to 21,258.64 points. The shares of Mitsubishi Motors registered a decline of 0.20% after Bloomberg said the mandate of the former head of the Renault-Nissan-Mitsubishi alliance Carlos Ghosn as chairman of the company was not renewed, appointing the Chief Executive Officer Osamu Masuko on the post. Within the economic news, Japanese inflation continues to fall still lagging behind the central bank’s goal. The core inflation, monitored by monetary authorities, and not including heavily variable prices for fresh food, increased by 0.8% YoY in May. In April this price index rose by 0.9% YoY. The main CPI index (excluding food and energy prices) rose by 0.5% YoY in May on an annual basis, official data show.
South Korean index Kospi dropped by 0.25% to 2,125.86 points. The stocks of LG Chem declined by more than 1%.
In Australia, local index S&P ASX 200 reported a decline of 0.55% to 6,650.80 points. The shares of the biotech company CSL declined by more than 3%. The oil company Beach Energy posted a 3.21% rise in shares, while the market value of Santos rose by 1.69%.
European markets mid-session recap
The European stocks edged slightly higher on Friday after surprisingly strong PMI data in Germany and France.
The Eurozone manufacturing sector activity continued to improve in the month of June. The industrial PMI came in at 2-month highs of 47.8 in June, however, slowly below the 48.0 points expected by the analysts. Meanwhile, the services PMI rose sharply to 7-month highs of 53.4 vs. 52.9 expected and 52.9 last. On this background, the pan-European Stoxx 600 index stalled at 386.08 points, being under pressure from the global geopolitical tensions.
German index DAX 30 inched higher by 0.19% to 12,379.02 points at 10:00 GMT, after half an hour ago reached a high of 12,421.31 points. The German manufacturing purchasing managers index (PMI) arrived at 45.4 (4-month highs) versus 44.5 expected and 44.3 previous. Meanwhile, services PMI hit a two-month high level of 55.6 as against previous months reading of 55.4 and 55.4 anticipated. The IHS Markit Flash Germany Composite Output Index came in at 52.6 in June, unchanged from that booked in May and bettered 52.5 expectations. The stocks of carmakers are into the green with Volkswagen adding 0.38% and Daimler up by 0.09%. The chemical giant BASF rose by 0.58%, while pharmaceutical company Bayer sank by 0.61%.
French index CAC 40 is trading up by 0.18% to 5,545.63 points at mid-session. France’s private sector grew more strongly than expected in June, with output expanding at the fastest pace since November. France PMI Manufacturing rose notably to 52.0, up from 50.6 and beat expectation of 50.9. PMI Services rose to 53.1, up from 51.5 and beat expectation of 51.6. Financial stocks are mixed with Societe Generale adding 0.69%, while BNP Paribas down by 0.48%. The situation with carmakers is similar with Renault adding 1.51% and Peugeot wiping out 0.74%.
British blue-chip index FTSE 100 is slightly up by 1.59 points, or 0.02%, to 7,426.03 points. Oil majors Shell and BP rose slightly as tensions in the Middle East escalated after a media report said that U.S. President Donald Trump had approved military strikes on Friday against Iran. The miners Glencore and BHP got a lift as copper prices extended gains made on signals that the US Fed is ready to cut interest rates as early as next month. Domino’s Pizza Group fell 5% after a frontrunner to replace its outgoing chief executive slapped down a media report that he would step into the role, insisting he was invested in his job as European head of Domino’s Pizza Enterprises.
Wall Street pre-session recap
The US stock index futures traded slightly lower on Friday amid growing geopolitical tensions with Iran.
At 6:15 a.m. ET, Dow futures were down 38 points, implying a lower open of 29 points. Futures on the S&P and Nasdaq also traded lower.
On the data front, investors will be keeping a close eye on June manufacturing and services PMI at 0945 ET, as well as existing home sales for May due at 10 ET.