Geopolitical uncertainty gripped financial markets on Friday as renewed hostilities between the United States and Iran in the Strait of Hormuz sent oil prices higher and rattled investor confidence, even as US stock futures pointed to a modest recovery following Thursday’s pullback.
Strait of Hormuz Clash Sparks Volatility
Thursday’s exchange of fire between US and Iranian forces marked the most serious escalation since a ceasefire took effect on April 8, raising questions about whether the fragile truce could hold. Iran accused the US of attacking an Iranian oil tanker, while Washington blamed Tehran for targeting US naval vessels east of the strait. The United Arab Emirates reported intercepting incoming missiles and drones from Iran.
Brent crude surged to approximately $104 per barrel on Friday morning, up from around $100 the day before, as the confrontation threatened the world’s most critical oil chokepoint. France’s CAC 40 fell 1.05% on Friday, while the Euro Stoxx 50 declined 0.89%.
US Markets Pulled Back Thursday Despite AI Strength
US equities closed lower on Thursday, retreating from record highs set earlier in the week. The Dow Jones Industrial Average fell 313 points, or 0.6%, to 49,597. The S&P 500 dropped 0.4%, the Nasdaq Composite edged down 0.1%, and the Russell 2000 slid 1.6%.
Yet AI-related stocks remained a bright spot. Datadog soared 31% after reporting quarterly revenue above $1 billion for the first time, a 32% year-over-year increase, and raising its full-year guidance. The rally lifted peers Snowflake and MongoDB, each gaining roughly 10%.
Bonds, Jobs Data, and Diplomatic Signals
The 10-year Treasury yield eased to 4.37% on Friday after reaching 4.43% earlier in the week, though it remained elevated above its long-term average of 4.25%. Investors were also awaiting April’s jobs report, with economists projecting 55,000 new positions — well below March’s 178,000 — while the unemployment rate was expected to hold at 4.3%.
Despite the military flare-up, diplomatic channels remained open. The US said Friday it expected Iran’s response to its latest peace proposal, delivered through Pakistani mediators, within hours. President Trump asserted that the ceasefire remained in effect.
