Asian Stocks to Slip on Iran Concerns, Oil Climbs: Markets Wrap

(Bloomberg) — Stocks in Asia looked set to edge lower Friday after a resurgence in geopolitical tensions sent US stocks and bonds lower. Oil jumped, reviving inflation concerns ahead of a key US jobs report.

Equity-index futures pointed to modest declines in Japan, Hong Kong and Australia, while contracts for South Korea edged higher. Earlier, Wall Street gauges dropped on Thursday for a second consecutive day as Iran sought to bar US and Israeli ships from the Strait of Hormuz. Sentiment steadied as US futures contracts for the tech-heavy Nasdaq 100 Index climbed 0.3% in early Asian trading.

US crude rose over 1% on Friday to $78.10 a barrel as escalating tensions in the Middle East and a lack of clarity on a deal to reopen the crucial waterway lifted the commodity. Higher energy prices revived concerns that the Federal Reserve may need to keep interest rates elevated, sending the 10-year Treasury yield up seven basis points to 4.68%. Treasury futures inched lower in early Asian trading.

The dollar posted its biggest gain in two weeks, while gold held near $4,240 an ounce.

Attention now turns to Friday’s US employment report for fresh clues on the Fed’s policy path. A stronger-than-expected payrolls reading could reinforce the case for higher-for-longer interest rates, while any escalation in Middle East tensions risks fueling energy prices and adding to market volatility.

“Near-term risks remain, especially if US data stay firm, oil prices keep inflation concerns alive, or markets continue to price in a more hawkish Federal Reserve rate path,” said Ulrike Hoffmann-Burchardi at UBS Chief Investment Office.

Iran will seek to restrict US and Israeli ships from the Strait of Hormuz and require compensation from countries it considers hostile before allowing passage, according to local media reports on a proposed Iran-Oman agreement to manage the strategic waterway.

The reports come as officials in both Washington and Tehran have signaled that an accord may be close. President Donald Trump, who recently stepped back from threats to resume military strikes on Iran, said Thursday negotiations were “going fine” and that he was involved, but declined to say whether a deal had been reached.

Separately, Fars news agency said Iranian naval forces had struck “hostile targets” at the entrance to the strait.

“Wall Street is reversing again from sharp recent gains, as a lack of clarity over the Strait of Hormuz has investors questioning whether the strong rally at the start of the week was justified by perceived improvements in geopolitical negotiations,” said José Torres, senior economist at Interactive Brokers.

US economic data released Thursday highlighted the resilience of the US labor market, leaving inflation as the key variable for the Fed’s September meeting. Initial jobless claims remained below 200,000 for a third consecutive week, while a separate report showed labor productivity accelerated by more than expected in the second quarter as companies worked to offset higher costs.

Traders now turn their attention to Friday’s payrolls report. Economists surveyed by Bloomberg expect employers added 80,000 jobs in July, following a weaker-than-expected gain of 57,000 in June. The report is expected to provide the clearest signal yet on whether the labor market is cooling enough to support expectations for Fed easing later this year.

“Friday’s jobs report is of greater importance for markets given how fast this stock market has rallied over the past week, and ultimately we will need to see a number that is not too hot and not too cold in order for the market to keep grinding higher,” said Clark Bellin at Bellwether Wealth.

Corporate Highlights:

Alphabet Inc. is set to raise $25 billion from a bond sale after generous yield payouts helped secure one of the year’s largest order books for AI-related debt. Japanese beverage maker Kirin Holdings Co. is acquiring Toronto-based Jamieson Wellness Inc. in a deal that values the Canadian vitamins and supplements maker at about C$2 billion ($1.4 billion). DeepSeek has resumed its second funding round, seeking close to $8 billion, with Monolith Management in talks to contribute, according to people familiar with the matter. Deutsche Bank AG and KBC Group NV have frozen some of Radiant World’s Singapore bank accounts, while some other banks have suspended credit lines, according to people familiar with the matter who asked not to be identified due to the sensitivity of the subject. Some of the main moves in markets:

Stocks

S&P 500 futures were little changed as of 8:14 a.m. Tokyo time Hang Seng futures were little changed S&P/ASX 200 futures were little changed Currencies

The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1523 The Japanese yen was little changed at 158.41 per dollar The offshore yuan was little changed at 6.7487 per dollar The Australian dollar was little changed at $0.7031 Cryptocurrencies

Bitcoin fell 0.1% to $64,309.91 Ether fell 0.1% to $1,903.8 Bonds

Australia’s 10-year yield advanced to 4.99% Commodities

West Texas Intermediate crude rose 1% to $78.10 a barrel Spot gold rose 0.1% to $4,244.87 an ounce This story was produced with the assistance of Bloomberg Automation.

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