Global financial markets saw mixed movements on Friday as thin holiday trading amplified existing uncertainty, driven by simmering geopolitical tensions in the Middle East and ongoing digestion of the latest batch of corporate earnings results.
Many of the world’s major financial centers remained closed for the May 1 international labor holiday, including key markets across mainland China, Hong Kong, France, and Germany, leaving thinner-than-usual trading volumes to amplify price swings across open venues. Among active exchanges, Japan’s Nikkei 225 closed up 0.4% at 59,513.12, while London’s FTSE 100 slipped 0.6% to 10,313.70, dragged down by NatWest. The British bank reported higher quarterly net profit but issued a cautionary note that domestic economic conditions are on track to deteriorate in coming months.
Energy markets were the focal point of investor attention after a day of extreme volatility the previous session, with oil prices eventually stabilizing around $111 a barrel for international benchmark Brent crude. The wild swing was triggered by escalating fears of renewed hostilities between the United States and Iran, with no visible progress toward a diplomatic deal to de-escalate tensions. Investors are particularly concerned about the potential for a prolonged disruption to shipping through the Strait of Hormuz, a critical chokepoint that carries roughly one-fifth of the world’s daily global oil supplies.
Earlier this week, Brent surged to a four-year high above $126 per barrel after Axios reported that former U.S. President Donald Trump would receive a briefing on potential new military strikes against Iran, compounding existing anxiety following warnings that a blockade of Iranian ports could last for months. This latest energy market shock has stoked broader fears of persistent global inflation, prompting major central banks around the world to hold interest rates steady this week as they monitor evolving economic risks. Both the European Central Bank and Bank of England kept borrowing costs unchanged on Thursday but left the door open for future rate hikes if inflation pressures do not abate, matching the cautious stance adopted this week by the U.S. Federal Reserve and Bank of Japan.
Despite geopolitical headwinds, U.S. markets closed out Thursday at fresh record highs, with both the S&P 500 and Nasdaq notching new closing records, supported by stronger-than-expected corporate earnings and continued resilience in U.S. economic growth. “The latest U.S. earnings season has been robust, which has helped prevent global markets from suffering big losses despite the impact of the Iran conflict,” noted Russ Mould, investment director at AJ Bell. Big tech led the positive earnings momentum: Alphabet, Google’s parent company, jumped 10% after posting forecast-beating profits and solid revenue growth across all its core business units Wednesday, while Apple beat analyst expectations after Thursday’s market close, driven by surprisingly strong iPhone demand.
In currency markets, the yen saw a slight weakening against the U.S. dollar one day after a sharp rally fueled by speculation that Japanese financial authorities had intervened in foreign exchange markets to prop up the slumping currency. Japanese officials have issued repeated public warnings in recent weeks about excessive yen depreciation, signaling their willingness to step in to stabilize valuations. As of 1025 GMT, Brent crude traded up 0.7% at $111.20 per barrel, while U.S. West Texas Intermediate crude gained 0.3% to hit $105.39 a barrel. The Dow Jones Industrial Average closed Thursday up 1.6% at 49,652.14, and the dollar traded at 156.50 yen, down slightly from 156.60 yen a day earlier.
Analysts note that while near-term volatility is likely to continue as geopolitical risks unfold, strong corporate earnings have so far acted as a buffer for global equities. “If oil stays in the $100-a-barrel range for an extended period, the broader economic costs will eventually be harder to ignore,” said Matt Britzman, senior equity analyst at Hargreaves Lansdown. “But for now, earnings are the bigger fish, and markets are happy to keep swimming with the current.”