Geopolitical Concerns May Weigh On Wall Street After Israeli Airstrikes Against Iran

The major U.S. index futures are currently pointing to a notably lower open for the markets on Friday, with stocks likely to show a significant move back to the downside after ending the previous session modestly higher.

Geopolitical concerns are likely to weigh on Wall Street early in the session after Israel launched a series of airstrikes against Iran earlier this morning.

The Israeli airstrikes targeting nuclear facilities and ballistic missile factories killed at least three of Iran’s senior military leaders.

Iran retaliated by launching more than 100 drones toward Israeli territory, which the Israel Defense Forces said they are working to intercept.

The attacks have led the worries about a wider conflict, and the price of crude oil has spiked amid concerns about supply disruptions.

Responding to the news in a post on Truth Social, President Donald Trump urged Iran to reach a nuclear agreement before an escalation of the attacks.

“There has already been great death and destruction, but there is still time to make this slaughter, with the next already planned attacks being even more brutal, come to an end,” Trump said.

“Iran must make a deal, before there is nothing left, and save what was once known as the Iranian Empire,” he added. “No more death, no more destruction, JUST DO IT, BEFORE IT IS TOO LATE.”

Stocks recovered from an early move to the downside to move modestly higher over the course of the trading session on Thursday. With the turnaround, the major averages largely offset the pullback seen during Wednesday’s session, with the Dow and the S&P 500 rebounding to three-month closing highs.

The S&P 500 ended the day up 23.02 points or 0.4 percent at 6,045.26, the Dow climbed 101.85 points or 0.2 percent to 42,967.62 and the Nasdaq rose 46.61 points or 0.2 percent to 19,662.48.

The turnaround on Wall Street came as traders digested the latest U.S. inflation data, with a report from the Labor Department showing producer prices crept up by less than expected in the month of May.

The Labor Department said its producer price index for final demand inched up by 0.1 percent after slipping by a revised 0.2 percent in April.

Economists had expected producer prices to rise by 0.3 percent compared to the 0.4 percent decline originally reported for the previous month.

Meanwhile, the report said the annual rate of growth by producer prices accelerated to 2.6 percent in May from 2.5 percent in April, in line with economist estimates.

“For the second day in a row, inflation data came in lower than expected and this gives the Fed room to sit on their hands,” said Chris Zaccarelli, Chief Investment Officer for Northlight Asset Management.

He added, “As long as inflation isn’t increasing – or even better, is decreasing – the Fed can be patient and wait for more information on how the new tariffs and trade negotiations are going to impact the price stability part of their dual mandate later this year.”

Stocks moved lower earlier in the day due in part to lingering uncertainty about trade amid a lack of details about the U.S.-China trade deal announced on Wednesday.

President Donald Trump told reporters he would send letters to other U.S. trade partners in about two weeks outlining new tariff rates.

Trump also indicated he would be willing to extend the 90-day pause on tariffs set to expire early next month but said he doesn’t think it will be necessary.

Gold stocks showed a strong move to the upside amid a sharp increase by the price of the precious metal, with the NYSE Arca Gold Bugs Index climbing by 1.5 percent.

Significant strength also emerged among interest rate-sensitive utilities stocks, as reflected by the 1.4 percent gain posted by the Dow Jones Utility Average.

Software, pharmaceutical and networking stocks also moved notably higher on the day, while airline stocks extended Wednesday’s slump.

Commodity, Currency Markets

Crude oil futures are soaring $5.49 to $73.53 a barrel after slipping $0.11 to $68.04 barrel on Thursday. Meanwhile, after surging $58.70 to $3,402.40 an ounce in the previous session, gold futures are jumping $45.70 to $3,448.10 an ounce.

On the currency front, the U.S. dollar is trading at 144.17 yen versus the 143.48 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.1520 compared to yesterday’s $1.1584.

Asia

Asian stocks tumbled on Friday after Israel conducted “pre-emptive” strikes on Iran; targeting several nuclear and military assets.

Israel also declared a state of emergency in anticipation of a missile and drone strike by Tehran and said it has begun intercepting Iranian drones.

The U.S. dollar advanced along with other safe-haven assets, including U.S. Treasury bonds and gold.

Oil prices were up more than 5 percent as the escalation of hostilities in the Middle East raised worries about disrupted oil supplies.

China’s Shanghai Composite Index fell 0.8 percent to 3,377 as Israel-Iran tensions intensified and Sino-U.S. trade optimism waned. Hong Kong’s Hang Seng Index declined 0.6 percent to 23,892.56 amid tensions over Tehran’s rapidly advancing nuclear program.

Japanese markets closed lower, dragged down by exporters and tech stocks. The Nikkei 225 Index slid 0.9 percent to 37,834.25, while the broader Topix Index settled 1 percent lower at 2,756.47.

Toyota Motor fell 2.4 percent and Nissan dropped 1.3 percent as the yen strengthened. In the tech sector, Tokyo Electron and Screen Holdings both plummeted around 4.8 percent

Oil explorers rose, with Inpex rallying 3 percent as global oil prices soared on supply concerns.

Seoul stocks fell for the first time in eight trading sessions following Israel’s pre-emptive strike on Iran and lingering trade tensions.

The Kospi ended down 0.9 percent at 2,894.62. Samsung Electronics, Samsung Biologics, LG Energy Solution and Hyundai Motor declined 1-3 percent.

Australian and New Zealand markets fell as domestic bond yields dipped to a six-week low. Australia’s benchmark S&P/ASX 200 Index slipped 0.2 percent to 8,547.40, extending losses for a second day running. The broader All Ordinaries Index closed 0.3 percent lower at 8,770.60.

Across the Tasman, the benchmark S&P/NZX-50 Index fell 0.8 percent to 12,552.87.

Europe

European shares have moved lower on Friday as heightened Middle East tensions offset encouraging inflation data from Germany and France.

Israel launched strikes against Iran, targeting nuclear facilities and ballistic missile factories as part of efforts “to damage Iran’s nuclear infrastructure, its ballistic missile factories and military capabilities.”

The overnight strikes on the country killed at least three of its senior military leaders. Iran retaliated by launching more than 100 drones toward Israeli territory.

In economic news, German consumer prices logged steady annual growth in May due to the continued decrease in energy prices, final data from Destatis showed today.

The consumer price index climbed 2.1 percent from a year ago, the same rate of growth as posted in April. The rate matched the flash estimate released on May 30.

Inflation based on the harmonized index of consumer prices softened to 2.1 percent from 2.2 percent in the previous month.

Elsewhere, French consumer price inflation moderated slightly as initially estimated in May to the lowest level in more than four years amid a slowdown in costs for services and a continued fall in energy prices, the latest data from the statistical office INSEE showed.

The consumer price index rose 0.7 percent on a yearly basis in May, slower than the 0.8 percent increase seen in April. That was in line with the flash data published on May 27. This was the lowest inflation rate since February 2021, when prices had risen 0.6 percent.

The German DAX Index is down by 1.1 percent, the French CAC 40 Index is down by 0.8 percent and the U.K.’s FTSE 100 Index is down by 0.1 percent.

Travel-related stocks slumped, with Lufthansa, easyJet, Wizz Air Holdings and British Airways owner ICAG falling 3-5 percent.

Oil & gas giant BP Plc rallied 3 percent and Shell added 1.7 percent as crude prices jumped more than 4 dollars a barrel on supply concerns.

Technology group Ocado tumbled 3 percent after announcing that it has drawn down on a Letter of Credit under its deal with Kroger Co. (KR), for $152 million, issued by the Bank of Nova Scotia.

Oxford Instruments lost 4 percent despite reporting strong results for the fiscal year ended March.

U.S. Economic News

The University of Michigan is scheduled to release its preliminary report on consumer sentiment in the month of June at 10 am ET. The consumer sentiment index is expected to rise to 53.5 in June after holding at 52.2 in May.