MARKET WRAPS
Stocks:
European indexes opened in the red and have remained there as the elevated oil price weighed on industrial stocks and banks. Miners were also lower as metal prices declined, but energy stocks rose.
The dollar was benefiting from its safe-haven role and America's position as a net oil exporter.
By contrast the euro was particularly weak as the bloc imports a large amount of its energy.
The currency dropped to a seven-month low on concerns that inflation will rise while growth gets stung at the same time.
ING said the euro could extend its losses as investors now brace for the possibility of many months of disruption to energy supplies.
"The market probably has little confidence that Iran can be bombed into submission and instead will be looking for any paths to a halt in hostilities, be that through a ceasefire or Washington declaring mission accomplished."
The European Central Bank was in a difficult position and could be forced to raise interest rates in order to tame inflation-even if growth is weak.
Markets showed investors now expected the ECB could raise rates by July, having previously bet on unchanged rates this year, according to LSEG.
Stocks to Watch
Bernstein said investors were beginning to reassess BMW as it lowered its price target on the stock to reflect lowered estimates on the back of BMW's 2026 guidance.
"We still see meaningful upside to BMW as the equity story becomes increasingly appreciated."
Deutsche Bank also lowered its target price on the stock, keeping its rating at buy.
U.S. Markets:
Stock futures were edging up early Friday after indexes suffered major drops in the previous session.
PCE inflation data is due at 1230 GMT.
Stocks to Watch
Tesla rose 0.6% premarket trading, shrugging off moves from its rival Rivian Automotive.
Adobe fell 7.4% after better-than-expected earnings were overshadowed by the resignation of the software company's long-time CEO.
Fertilizer companies continued to gain on expectations shipping disruption in the Strait of Hormuz will boost prices.
Forex:
The euro fell to a seven-month low against the dollar on building concerns about the economic fallout from rising energy prices resulting from the Iran war.
The eurozone's terms of trade could be dented by higher energy prices as an energy importer.
However, the focus is on the growth implications of higher energy prices.
The dollar rose to a three-and-a-half-month high against a basket of currencies.
"The second week of the Iran conflict is coming to an end and there still seems to be no solution in sight," Commerzbank said.
The currency was likely to strengthen in the near term as growth in the U.S. was better and it's easier for the Fed to delay expected rate cuts to respond to potentially higher inflation, it added.
Sterling fell after data showed the U.K. economy unexpectedly registered flat growth in January.
"Our expectations for a strong start to the year have diminished," Deutsche Bank said.
The Iran conflict could further weigh on growth as higher energy prices squeeze disposable incomes and constrain investment and spending, it added.
Bonds:
Eurozone government bond yields rose , with the 10-year Bund yield once again rising to its highest in two and half years and edging closer to 3%.
Continued oil price uncertainty and potential upside risks to Friday's PCE inflation data argued against buying Bunds, Commerzbank said.
Citi said short-end government bond yields were likely to remain vulnerable until there is some clarity when the Strait of Hormuz might re-open and that central bank meetings next week might add to volatility.
The ECB could open the door to insurance rate hikes, while the BOE was likely to sound cautious and retain optionality to resume rate cuts later.
Short- and medium-term Treasury yields declined , while ultralong Treasury yields were marginally higher as bond investors sought clarity on the economic impact of the war in Iran.
The 10-year Bund yield rose toward the 3%
psychological threshold and a crossing of it "should not spell mayhem for bond investors," the Investment Institute by UniCredit said.
Reviewing past episodes when Bund yields traded around this level can help put the current environment into context and form expectations for the months ahead, it added.
SocGen said the oil shock stemming from the war was consistent with its bearish view on Bunds for 2026.
In bond markets several premiums were rising at once , said Aberdeen Investments.
Union Bancaire Privee said that within fixed-income focused strategies, opportunities lie with rates and government bond markets , driven by shifting inflation dynamics both within and across economies, and convertible bond arbitrage was benefiting from a number of tailwinds.
Energy:
Brent crude rose above $100 a barrel despite efforts to boost global supplies by temporarily allowing countries to purchase Russian oil already at sea.
"Quick measures are unlikely to relieve the pressure," Swissquote said.
Treasury Secretary Scott Bessent called for an international coalition to escort tankers through the Strait of Hormuz "as soon as it is militarily possible," though Iran's new leader has vowed to keep blocking the waterway.
The benchmarks of Brent and WTI were on track for weekly gains of around 9% and 11%, respectively.
Metals:
Gold prices were on track for weekly losses , pressured by a stronger dollar, rising oil prices and uncertainty surrounding Fed policy.
"The USD has strengthened due to its safe-haven status, particularly as rising oil prices benefit the U.S. which is a net energy exporter," ANZ said.
"Concerns are mounting over the Fed's approach to rate cuts, with higher oil prices raising the possibility of renewed inflation pressures."
EMEA HEADLINES
German Chemical Industry Warns of Supply-Chain Hit From Middle East War
Germany's chemical industry is experiencing early signs of supply-chain disruptions from the war in the Middle East, with risks spreading beyond oil and natural gas to other raw materials, the country's industry trade group said.
The business group, known as VCI, on Friday said the conflict in Iran and the blockade of the Strait of Hormuz are raising concerns about supply bottlenecks for raw materials such as ammonia and phosphate, helium, and sulfur.
Vincorion Approaches $1 Billion Market Cap Under IPO Price
Defense and aviation supplier Vincorion said a planned listing on the Frankfurt Stock Exchange would give it a total market capitalization of 850 million euros ($978.6 million).
The German company Friday set a sale price of 17 euros a share and said it will offer investors up to 345 million euros of shares. It expects the offer period to start on March 16 before a planned first day of trading on March 20.
Fintech Airwallex Earmarks $1.1 Billion for European Expansion
Cross-border payments company Airwallex plans to invest $1.135 billion to expand across Europe over the next five years after a decade of growth in Asia-Pacific.
The fintech company, which was founded in Australia in 2015, runs a financial platform that uses artificial intelligence to help businesses manage multicurrency accounts, process international payments, and run invoicing and expense systems. The company, which counts Visa, Mastercard, Salesforce and China's Tencent Holdings among its shareholders, was valued at $8 billion in a December funding round.
Deutsche Bank says its private-credit exposure has increased to $30 billion - one of the highest of Wall Street banks
Another bank has revealed its exposure to private credit as the struggling industry faces growing concern from anxious investors.
In its annual report released Thursday, Deutsche Bank DB XE:DBK said it had a $30 billion private-credit exposure for the year of 2025.
GLOBAL NEWS
Why Bank Stocks Are Getting Beaten Up Over Private Credit
Many private-credit funds have been barring the door for their clients. They had better hope their bankers don't turn off the taps, too.
Funds that make loans to companies are also themselves borrowers, often from banks. In good times, funds like nontraded business-development companies use borrowing to boost their returns.
An Exodus of Money Endangers Wall Street's Private-Credit Craze
The private-credit engine that powered massive growth on Wall Street is sputtering, with investors trying to pull money out of big funds, forcing firms into uncomfortable decisions and endangering their future profits.
The latest example came Wednesday when Cliffwater told clients that investors in its largest fund asked to cash out 14% of their money this quarter. The $33 billion fund will pay out about 50% of the redemption requests, meaning that the other half will need to wait at least another quarter to exit.
Israeli Officials Think Iran's Regime Isn't Likely to Fall Soon
JERUSALEM-Israeli officials now assess that Iran's ruling regime is unlikely to fall in the immediate future, as Tehran's battered rulers remain in control and conditions on the ground aren't yet ripe for a popular uprising, people familiar with the matter said.
Nearly two weeks into the war, Iran's military and political leadership appears functional and responsive to events, while its domestic opponents have been cowed by a heavy security presence. Israeli officials assess that changing the equation would likely require many more weeks or months of fighting.
Emboldened by Oil Shock, Iran's Leaders Play Diplomatic Hardball
Arab diplomats trying to find a diplomatic path out of the war now being waged by the U.S. and Israel against Iran say Tehran, emboldened by its ability to rattle the global economy by choking oil shipments, has laid out steep preconditions for any return to talks.
(MORE TO FOLLOW) Dow Jones Newswires
03-13-26 0713ET
