Volkswacht Bodensee - Oil jumps, stocks fall as US-Iran clashes spark peace talks fears

Markets across the world have enjoyed a strong run this week on growing optimism that the 10-week conflict -- which has sent oil prices soaring -- will be concluded soon.

However, the risk-on mood was tempered Thursday following news that US forces had carried out strikes on Iranian military targets in response to an attack on three American destroyers in the Strait, threatening a month-old ceasefire.

For its part, Iran's central military command accused the United States of violating the ceasefire by attacking an oil tanker and another ship.

Following the clashes, Donald Trump wrote on his Truth Social platform: "We'll knock them out a lot harder, and a lot more violently, in the future, if they don't get their Deal signed, FAST!"

But when asked in Washington if the truce was still on, the US president said: "Yeah it is. They trifled with us today. We blew them away."

The clash came a day after Trump said an agreement could be near and as Tehran considered a one-page US proposal to end the conflict and reopen the Strait, through which a fifth of world oil and gas usually passes.

Also, the Wall Street Journal said the White House was considering restarting an operation to help commercial ships through the Strait, which Trump dropped after just a day earlier this week.

"Project Freedom" had caused anger in Iran and led it to carry out attacks on the United Arab Emirates.

Oil prices, which fell around 10 percent over the past three days, rose more than one percent Friday.

And equity markets retreated at the end of a week that saw a strong rally across Asia, helped by a surge in tech firms linked to artificial intelligence.

Seoul was off more than one percent after hitting multiple records this week, while Tokyo, Hong Kong, Sydney, Shanghai, Singapore, Wellington, Taipei, Manila and Jakarta were also down.

The losses followed a retreat on Wall Street, where the S&P 500 and Nasdaq came down from all-time highs, though analysts pointed out that losses were not surprising after the recent run-up.

"Once again, the news flow on the geopolitical front has shown that the path towards a lasting agreement is anything but linear," said Chris Weston at Pepperstone.

He added that "traders have had to rethink the assumptions on the trajectory of the conflict and the normalisation of vessel flows through Hormuz that had been made over the last couple of sessions".

Sterling weakened against the dollar as investors kept a check on local elections in the United Kingdom, where the ruling Labour Party is expected to suffer hefty losses that could amplify calls for Prime Minister Keir Starmer to resign or face a leadership challenge.

Meanwhile, Japanese media reported that authorities had spent around $64 billion since last week propping up the yen.

The market interventions reportedly began on April 30 when the currency weakened to near 160 per dollar, the lowest in almost two years.

Since then there have been several spikes in the value of the yen, sparking speculation of further moves by the government. On Friday it was trading close to 157.

Atsushi Mimura, Japan's top currency official, on Thursday declined to comment, local media reported.

Investors are also awaiting the release of US jobs data due later in the day, hoping for an idea about the impact of the war and rising prices on the economy.

- Key figures at around 0230 GMT -

West Texas Intermediate: UP 1.2 percent at $95.93 a barrel

Brent North Sea Crude: UP 1.5 percent at $101.56 a barrel

Tokyo - Nikkei 225: DOWN 1.1 percent at 62,174.12 (close)

Hong Kong - Hang Seng Index: DOWN 1.1 percent at 26,345.91

Shanghai - Composite: DOWN 0.1 percent at 4,175.40

Pound/dollar: DOWN at $1.3558 from $1.3576 on Thursday

Euro/pound: UP at 86.54 pence from 86.52 yen

Euro/dollar: DOWN at $1.1734 from $1.1746

Dollar/yen: UP at 156.87 yen from 156.83 yen

New York - DOW: DOWN 0.6 percent at 49,596.97 (close)

London - FTSE 100: DOWN 1.6 percent at 10,276.95 (close)

H.Gerber--VB