U.S. and European equity futures saw modest gains on Friday, while oil prices held above $100 per barrel, deepening concerns over soaring global inflation. As the Iran conflict enters its second week, a global equity index is set for a second consecutive weekly decline, after having hit a record high just before the outbreak of hostilities.
At the time of writing, Dow Jones futures were up 0.36%, S&P 500 futures advanced 0.36%, and Nasdaq futures climbed 0.36%.
In Europe, Germany's DAX index rose 0.05%, Britain's FTSE 100 gained 0.14%, France's CAC 40 edged up 0.02%, and the Euro Stoxx 50 increased by 0.13%.
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Jefferies analyst Brent Thill commented: "While we hold CEO Narayen in the highest regard as a legend in the software industry, given the massive transformation driven by AI, we also agree that now is an appropriate time for a change."
**Caution Over Potential Escalation** Market reaction has been muted to measures aimed at easing global oil supply pressures by relaxing sanctions on Russian crude. Investors are positioning for persistent inflationary shocks stemming from the conflict, evidenced by rising long-term U.S. Treasury yields and a stronger U.S. dollar.
Recent statements from U.S. President Trump and Iran's new leader, Khamenei, indicate no signs of de-escalation in the war that is disrupting energy flows and global markets. Iran stated it would seek to ensure the Strait of Hormuz remains effectively closed, keeping investors highly vigilant about a potential worsening of the situation.
Jefferies' Chief European Strategist, Mohit Kumar, noted: "It's Friday, so investors are reassessing their hedge positions ahead of the weekend. Further escalation is quite likely in the near term."
**Oil Prices Sustain Above $100** Oil prices showed little reaction to a coordinated release of crude reserves by wealthy nations. Compared to early 2026, prices are now up more than 60%. The U.S. issued a second temporary waiver permitting the purchase of Russian oil and also plans to exempt a century-old shipping law that mandates the use of U.S. vessels for transport between American ports.
Brent crude rose above $101 after surging 9.2% on Thursday. WTI crude advanced 1.1% to $91.50 per barrel. Both benchmarks are on track for weekly gains of approximately 9% and 11%, respectively. U.S. Treasury Secretary Scott Bessent called for the rapid formation of an international coalition to escort tankers through the Strait of Hormuz "as soon as militarily feasible," although Iran's new leader vowed to continue blocking the waterway.
Goldman Sachs Group warned that if shipping traffic through the Strait of Hormuz remains depressed throughout March, crude prices could surpass the 2008 peak near $150 per barrel. The International Energy Agency stated the war is causing unprecedented disruption in oil markets, affecting 7.5% of global supply and a larger proportion of exports.
Chris Weston, Head of Research at Pepperstone Group, wrote in a report: "It feels like the market has further extended its expectations for both the duration of the Strait of Hormuz closure and the broader conflict, implying potentially more severe impacts on inflation and even consumption patterns."
**Inflation Emerges as Significant Risk** As rising energy prices fuel concerns about a fresh inflationary spike, investors are also focusing on U.S. inflation data due later Friday. Although these figures relate to the period before the conflict began, markets anticipate the Fed's preferred inflation gauge will show persistently high inflation. Simultaneously, a preliminary March consumer survey will reveal how American households perceive the impact of the Iran conflict amid recent gasoline price increases.
Tracy Chen, Global Fixed Income Portfolio Manager at Brandywine Global Investment Management, said in an interview: "Inflation is genuinely becoming a significant, escalating risk. The key is how long the conflict lasts. We have slightly increased our allocation to dollar-denominated assets to enhance hedging."
U.S. Treasuries were largely stable. The yield on the 10-year note dipped 0.6 basis points to 4.266%, while the 30-year yield rose 1.1 basis points to 4.894%. However, a measure of Treasury volatility climbed to a nine-month high as traders scaled back expectations for Federal Reserve rate cuts. Markets now price in less than 20 basis points of Fed easing this year, compared to 61 basis points before the conflict began.
Societe Generale rate strategists noted in a report: "The short-term logic remains unchanged: energy prices and rate volatility stay elevated. This is not an environment conducive to establishing large positions or betting on mispricing corrections."
Eurozone government bond yields rose, with the 10-year German bund yield again reaching a two-and-a-half-year high, approaching 3%.
**Dollar Strengthens** In currency markets, investors continued buying the U.S. dollar. The dollar index advanced 0.4% to a three-and-a-half-month high, after previously settling at a near two-month peak. According to LSEG data, the euro fell to a seven-month low of $1.1465. Commerzbank analyst Volkmar Baur suggested the dollar could strengthen further in the near term, supported by relatively robust U.S. economic growth and the Fed's ability to delay rate cuts. The dollar index reached a high of 100.089.
Both the euro and the yen, currencies sensitive to high oil prices, weakened. The yen fell to its weakest level since 2024, nearing ranges that previously prompted intervention by authorities. Sterling declined 0.6% after data indicated UK economic activity was stagnating even before the Middle East conflict began.
Despite a general decline in risk appetite, Bitcoin reclaimed the $70,000 level. LSEG data showed Bitcoin rose over 2% to a high of $71,993, while Ether gained 1.7% to $2,098.03. Louis Navellier of Navellier and Associates stated in a report: "One asset class showing less risk-off sentiment is cryptocurrencies."
Gold is poised for a weekly decline, with New York gold futures falling below $5,100. Gold faced pressure from a stronger dollar, rising oil prices, and uncertainty surrounding Fed policy. In early trading, gold futures dropped 0.6% to $5,095.30; concurrently, the stronger dollar made dollar-denominated commodities more expensive for overseas buyers.
Later in the session, U.S. Defense Secretary Pete Hergeseth is expected to hold a press conference early in the U.S. day. Meanwhile, investors will assess U.S. Personal Consumption Expenditures (PCE) data—the Fed's preferred inflation gauge—for further insights into the health of the U.S. economy.
The anticipated "Warsh era" of easing may not materialize as expected.
A survey showed economists have delayed their expectation for the next Fed rate cut from March to June, but still project two 25-basis-point cuts by year-end.
The 46 economists surveyed forecast a faster pace of easing than futures markets are pricing. Their median projection also implies one more cut in 2026 than Fed officials projected in December.
Among the economists surveyed, nearly a third expressed doubts about former Fed Governor Kevin Warsh, seen as a key figure President Trump might select to replace Chair Powell.
When asked if they believed Warsh would be committed to the Fed's 2% inflation target, 13% were uncertain and 18% answered "no."
**Top-Performing Fund Bullish on Chinese Tech Stocks** A top-tier emerging markets fund, outperforming 97% of its peers, is increasing investments in China's large AI hyperscale companies, betting they offer better value than U.S. tech giants spending heavily on expansion.
Caroline Cai, CEO of Pzena Investment Management, said her $3.9 billion fund has been adding to positions in digital platform companies like Tencent and Alibaba.
She believes these companies are undervalued and have greater upside potential given their potential to transform daily life. Cai stated in a New York interview: "You don't have to pay a high price for the potential productivity gains from AI."
**Stocks in Focus**