The S&P 500 dropped 1.5%, the Nasdaq 100 plunged 1.8% to six-month lows while the Dow Jones lost 0.8% to four-month lows on Friday amid escalating Middle East conflict and surging energy prices. This downturn drove the major averages into correction territory as West Texas Intermediate futures climbed further following reports that Iraq declared force majeure on all oilfields. Sentiment soured further as the Pentagon prepared to deploy additional Marines to the region while the Federal Reserve maintained interest rates between 3.50% and 3.75% earlier this week. Micron Technology fell 4.8% while Supermicro tumbled 33.3% as it faced ongoing pressure following chip smuggling charges against its CEO. Conversely, FedEx added 1% on strong guidance and energy majors like Exxon Mobil was 1% higher amid the crude spike.
Frankfurt's DAX 40 closed about 2% lower at 22,380 on Friday, the lowest since April 2025, marking the third consecutive session of declines. Traders weighed the risk of further escalation in Middle East tensions, reviving concerns over a prolonged energy crisis and price pressures. According to the Wall Street Journal, the US is sending three warships and roughly 2500 additional marines to the Middle East to reinforce positions in the war with Iran. In the meantime, Israel claimed to have killed two senior Iranian security officials, which could prompt fresh retaliation. E.ON (-5.7%) and SAP (-4.2%) posted the steepest losses in equities, while Siemens Energy, MTU Aero Engines, Rheinmetall, GEA Group, Zalando, and Siemens all fell more than 3%. On the upside, Heidelberg Materials and Infineon were the top performers, rising 3% and 1.4%, respectively. For the week, the index logged a 4.6% decline.
The Nikkei 225 Index fell 3.38% to close at 53,372, while the broader Topix Index lost 2.91% to 3,609 on Thursday, reversing gains from the previous session as oil prices surged again following fresh attacks on energy facilities in the Middle East, stoking inflation concerns. Japan remains highly exposed to oil supply shocks due to its reliance on oil imports from the Middle East. Japanese shares also followed a sharp Wall Street selloff overnight, triggered by hot US PPI data and rising inflation forecasts from the Federal Reserve, which narrowed the scope for interest rate cuts. Meanwhile, the Bank of Japan kept its policy rate unchanged in a widely expected move, though board member Hajime Takata dissented for the second meeting in a row, proposing a 25 basis point hike to 1%, citing upside inflation risks. Tech stocks led the decline, with sharp losses from Kioxia Holdings (-4.4%), Advantest (-4.6%) and Disco Corp (-1.6%). Japanese markets will be closed on Friday for a holiday.
