Software Mends as Oil Ascends

Global markets were unsettled by escalating US–Israeli strikes on Iran, with Wall Street booking losses as higher oil prices pressured cyclicals and lifted defence stocks, even as software names rebounded on temporarily easing AI concerns. European equities fell sharply amid geopolitical tension and energy-driven growth concerns, while Asia-Pacific markets advanced on Thursday’s hopes of diplomatic engagement.

Wall Street pressured as crude nears $80

US equities resumed their decline as escalating US–Israeli strikes on Iran and renewed oil price strength weighed on sentiment. The DOW fell -1.9%, the S&P 500 dropped -1.1%, and the NASDAQ lost -0.9%, with cyclicals including Walmart (-4.2%) and Caterpillar (-4.1%) leading losses. West Texas Intermediate Crude surged after Iran reportedly struck an oil tanker, intensifying concerns over potential disruption through the Strait of Hormuz. Defence stocks outperformed, while airlines extended losses as cancellations to Middle East hubs surpassed 23,000 flights. Software names rebounded as AI-related concerns eased, with Salesforce up +5.2%, Intuit gaining +6.3%, and ServiceNow rising +6.5%, while Booking Holdings jumped +8.1%. Broadcom (+4.8%) reported first-quarter earnings ahead of expectations, and CEO Hock Tan projected AI chip sales could exceed US$100bn next year, challenging Nvidia’s (-1.6%) dominance. Initial jobless claims held steady ahead of Friday’s payrolls report, where economists expect +55,000 jobs to have been added in February, while money markets pared rate-cut expectations amid rising energy-driven inflation risks. The US two-year yield rose +4bp to 3.583%, while the 10-year yield gained +5bp to 4.132%.

Wall Street jitters spill into Europe

European equities closed sharply lower as geopolitical tensions in the Middle East weighed on sentiment and erased earlier gains. The STOXX 600 fell -1.3%, with the FTSE 100 down -1.5%, Germany’s DAX losing -1.6%, and France’s CAC 40 sliding -1.5%. Spain’s IBEX 35 dropped -1.4% amid diplomatic friction after Madrid rejected US claims of military cooperation over Iran. Defence stocks were volatile, with German tank maker Renk ending down -10.0% despite reporting FY25 revenue up +20% to €1.37bn and an expanded order backlog of €6.7bn. In the UK, Rentokil surged +10.7% on stronger annual profits.

Asia-Pacific rebounds on easing tension hopes

Asian equities advanced after US jobs and services data lifted sentiment and reports suggested Tehran may be open to talks, though Iranian officials later denied ceasefire discussions. China’s Shanghai Composite rose +0.6% after Beijing pledged to accelerate tech self-reliance and inject ¥300bn into state-owned banks to guard against systemic risks, while Hong Kong’s Hang Seng gained +0.3%. Japan’s Nikkei 225 jumped +1.9%, recovering from three days of heavy losses. South Korea’s KOSPI surged +9.6%, driven by sharp rebounds in Hyundai Motor (+11.8%), Samsung Electronics (+12.0%), and SK Hynix (+10.9%). Australia’s ASX 200 added +0.4%, supported by a rebound in technology stocks including WiseTech Global (+7.1%), while New Zealand’s NZX 50 rose +0.6%.

Oil surges as metals diverge

WTI Crude rose +5.9% to US$75.03/bbl, Gold lost -1.4% to US$5,063.85/oz, and Iron Ore gained +0.5% to US$100.06/MT.