EMEA Morning Briefing : U.S. and Iran Exchange Fire in Persian Gulf

MARKET WRAPS

Watch For:

Germany foreign trade, industrial production; trading updates from Intesa Sanpaolo, Commerzbank, IAG, Airtel Africa, Rightmove, Clariant

Opening Call:

European stock futures traded lower early Friday. Asian stock benchmarks were down; the dollar strengthened; Treasury yields were flat; while oil futures and gold were up.

Equities:

Stock futures point to a lower open in Europe, after the U.S. and Iran exchanged fire in the Persian Gulf, undermining appetite for risky assets.

President Trump said the cease-fire with Iran is still in effect, calling the latest U.S. strikes against the country a "love tap."

There's "a more risk-off mood, with sporadic media headlines leading to investor doubts about a solution" to the U.S.-Iran conflict, said Gavin Friend, senior markets strategist at National Australia Bank, in commentary.

Forex:

The dollar strengthened, with renewed Middle East tensions bolstering risk-off sentiment.

U.S. forces intercepted Iranian attacks in the Strait of Hormuz, triggering worries over supply disruptions, CIMB analysts said. Higher oil prices are reinforcing inflation risks and supporting the dollar, the analysts added.

Bonds:

Treasurys have been moving in line with oil prices, which have soared during the U.S.-Iran war, because traders are expecting the higher prices to translate to higher inflation.

Stock traders are considering the Iran war as "a temporary shock, but rates [Treasurys] are simultaneously pricing in a more protracted conflict," according to Deutsche Bank macro strategist Henry Allen.

Energy:

Oil futures were up, following reports that U.S. forces launched retaliatory airstrikes against several Iranian targets after some U.S. Navy ships came under attack.

"As long as the Strait of Hormuz remains unstable, markets are likely to remain highly headline sensitive, with volatility capable of returning very quickly across all major asset classes," said Stephen Innes, managing partner at SPI Asset Management.

"In practical terms, the Strait of Hormuz now functions less as a normal shipping route and more as a geopolitical pressure valve at the center of the global macro system," he said.

Metals:

Gold strengthened, on signs of continuing U.S.-Iran tensions that could enhance the safe-haven appeal of the precious metal.

Meanwhile, "investors will closely monitor the upcoming U.S. employment reports for further clues on the strength of the economy and the Federal Reserve's monetary policy outlook," DHF Capital CEO Bas Kooijman said.

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Copper was down in early Asian trade, as traders weigh the prospects of a U.S.-Iran peace deal, ANZ Research analysts said.

The base metals market has been volatile amid concerns that higher energy prices could pressure global economic growth. The war in the Middle East has also disrupted supplies of sulphuric acid, a key input in copper processing, affecting copper prices, ANZ said.

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Iron ore gained ground, supported by stable steel mill production, Baocheng Futures analysts said.

Improved margins at mills also enhance the willingness and ability of mills to pay for iron ore. However, demand might be softening as industrial imbalances in the steel market persist. Further upside momentum remains to be seen and will depend closely on downstream steel performance, the analysts added.

TODAY'S TOP HEADLINES

Trade Court Rules Against Trump's New Global Tariffs

A federal trade court ruled that President Trump didn't have the authority to impose new global tariffs after a previous set of levies was struck down by the Supreme Court in February.

The decision on Thursday from the Court of International Trade invalidated Trump's attempt to impose a new 10% tariff on goods from virtually every nation by invoking authority under Section 122 of the Trade Act.

AI Is Distorting Practically Everything About the Economy

Until recently, artificial intelligence was a welcome tailwind for U.S. growth.

We're beyond that now. AI is more like a hurricane-strength weather system making itself felt across the entire economy. It is distorting the stock market, profits, the speed and composition of economic growth, trade and even our moods-especially about the job market.

Elon Musk Summoned to France to Face Criminal Charges

PARIS-French prosecutors are summoning Elon Musk to the French capital again-this time to face preliminary criminal charges in a sprawling investigation into his social-media platform, X.

The new summons, just weeks after Musk didn't show up for a voluntary interview with French prosecutors, escalates a trans-Atlantic feud over France's handling of its long-running probe of X. It also underscores a growing divergence between the U.S. and Europe over how-and whether-tech platforms like X should police online speech.

Gulf States Lift Restrictions That Blocked 'Project Freedom' in Strait of Hormuz

Saudi Arabia and Kuwait have lifted restrictions on the U.S. military's use of their bases and airspace imposed after the start of the American operation to reopen the Strait of Hormuz, according to U.S. and Saudi officials, removing a hurdle that had tripped up President Trump's effort to move ships through the vital waterway.

The Trump administration is now looking to restart the operation to guide commercial ships with naval and air support that it had paused after 36 hours this week, U.S. officials said. It isn't clear when that could happen though Pentagon officials gave a timeline of as early as this week.

How Anthropic's Mythos Threw the White House AI Strategy Into Chaos

WASHINGTON-On a recent call with the heads of the biggest artificial-intelligence companies, Vice President JD Vance was alarmed.

New AI models such as Anthropic's Mythos, which are capable of finding software vulnerabilities on their own, threatened to disrupt small-town banks, hospitals and water plants by starting cyberattacks that local governments weren't equipped to handle, Vance said.

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Expected Major Events for Friday

04:30/NED: Mar Manufacturing output

05:00/FIN: Mar Industrial Production

06:00/FIN: Mar Foreign trade

06:00/GER: Mar Foreign Trade

06:00/UK: Apr Halifax House Price Index

06:00/NOR: Mar Industrial Production Index

06:00/GER: Mar Industrial Production Index

06:00/SWE: Mar New orders & deliveries in industry

06:00/SWE: Mar Industrial Production Index

06:30/HUN: Apr CPI

07:00/SPN: Mar Industrial Production

07:00/SVK: Mar Industrial production

07:00/AUT: Mar Production Index

07:00/TUR: Mar Industrial Production Index

07:00/SWI: Apr Consumer Sentiment Index

08:00/ICE: Apr External trade, preliminary figures

08:00/BUL: Mar Industrial Production

09:00/GRE: Mar External Trade (provisional data)

09:00/LUX: Mar Industrial Production

09:00/CRO: Apr PPI

09:00/CRO: Mar Foreign Trade

09:00/POR: Mar International trade statistics

09:00/GRE: Apr CPI

10:00/IRL: Mar Industrial Production and Turnover

10:00/MLT: Mar Industrial Production Index

All times in GMT. Powered by Onclusive and Dow Jones.

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This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

05-08-26 0016ET