Oil spiked after the US struck bridges near Bandar Abbas to cut Iran's supply routes; a second wave of attacks hit Bahrain, Kuwait, and Qatar. Japan's Nikkei fell 4.5% on tech-led selling.
Alpha Score of 42 reflects weak overall profile with weak momentum, poor value, weak quality, weak sentiment.
The Middle East conflict dominated Friday's session, unfolding in a rapid, multi-stage sequence that kept oil and risk sentiment on edge throughout the day. The first wave saw the US strike three bridges in Iran's Hormozgan province, the Bandar Khamir overpass connecting Bandar Abbas to Lar, the Gariveh Bridge, and a third structure, alongside a railway station west of Bandar Abbas linking to the freight network serving Shahid Rajaei port, a telecommunications tower in Bandar Abbas, and a civilian airport in Iranshahr in the country's southeast. The Wall Street Journal, citing a senior US official, confirmed the campaign was aimed squarely at severing supply routes into Bandar Abbas, the naval base Iran uses to threaten shipping and project power into the Strait of Hormuz.
Iran's response came in stages. Its army said it carried out the eleventh phase of what it termed Operation Lightning, striking US facilities at Bahrain's Sheikh Isa Air Base with Arash suicide drones, targeting areas hosting US helicopters and P-8 reconnaissance aircraft, and describing the action as retaliation for US strikes on Iranian urban infrastructure that caused civilian casualties. Bahrain and Kuwait then came under direct attack, with sirens activated and explosions reported at the US Navy's Fifth Fleet base in Bahrain. Unconfirmed reports suggested Iran had also targeted the King Fahd Causeway linking Bahrain to Saudi Arabia, while further attacks were reported in Doha.
A later, distinct wave saw Iranian state media report five additional bridges struck in southern Iran in a fresh round of US strikes. Bahrain's Interior Ministry then sounded sirens for a second time on Friday, with that second wave extending into Kuwait and Qatar as well. The rapid succession of strikes and counter-strikes across five countries in a single session underscored how quickly the conflict's geographic footprint has expanded beyond its original Iran-Gulf axis.
Away from the Gulf, equity markets extended their tech-led slide. Japan's Nikkei sank close to 4.5% on a weak lead from Wall Street and a broader risk-off tone, part of a wider unwind in AI-linked valuations that has hit chipmakers particularly hard this week. South Korean markets were shut for Constitution Day, leaving Tokyo to absorb much of the regional selling pressure. Taiwan slumped too.
On monetary policy, Fed Vice Chair Philip Jefferson struck a measured but inflation-focused tone. He said he would be open to a rate hike later this year if inflation fails to cool, while stopping short of endorsing a move at this month's meeting. Current policy leaves the Fed "well positioned" to respond to incoming data, he said, even as he flagged the risk that a rapid succession of shocks, from tariffs to energy prices to AI-driven demand, could leave inflation expectations unanchored.
Politics added another cross-current for markets. President Trump accused China of illicitly acquiring 220 million US voter files, calling it the largest election-data breach in history, though he stopped short of alleging Beijing meddled in the 2020 election outcome itself. The accusations weighed on currencies with high sensitivity to US-China relations. Both the Australian and New Zealand dollars softened on the headlines, even as the broader relationship remains delicately poised ahead of a planned Trump-Xi meeting in September.
The dollar held steady and was on track to end the week little changed, as receding expectations for further Fed rate increases this year were offset by renewed safe-haven demand tied to the Middle East escalation. The euro was little changed near 1.1440. The yen remained languishing near a 40-year low around 162.40 per dollar, prompting renewed verbal intervention from Japanese Finance Minister Satsuki Katayama that had little impact. Market attention has also turned to a potential allocation shift by Japan's Government Pension Investment Fund and other pension funds, following Katayama's comments last week that Tokyo aims to steer state pension assets toward a substantially larger domestic allocation. Analysts said expectations of repatriation flows from Japanese investors could provide periodic support for equities and pressure Japanese government bond yields lower in the period ahead.
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