Global equities traded mixed on Friday while oil prices climbed after US President Donald Trump escalated Middle East tensions by warning that Washington could consider military action if Iran fails to reach what he described as a meaningful nuclear agreement.
The remarks unsettled investors and cast a shadow over a fragile recovery in global markets that followed an AI-driven sell-off earlier in the month. Traders are also awaiting fresh US economic data expected later in the day, which could influence expectations around interest rate policy.
Speaking at the inaugural meeting of his Gaza-focused initiative, Trump said Tehran must agree to a credible deal, warning that failure to do so could lead to serious consequences. The comments came as US military assets were reportedly positioned in the region, heightening geopolitical unease.
Israeli Prime Minister Benjamin Netanyahu issued a parallel warning, saying any hostile action would be met with a forceful response. The statements followed renewed diplomatic engagement, with US and Iranian representatives holding talks mediated by Oman in Geneva aimed at curbing nuclear tensions.
Oil markets reacted to the heightened risk environment, with benchmark crude prices rising to their strongest levels since June on fears that instability in the energy-rich Middle East could disrupt supply.
Across equity markets, trading was uneven. Hong Kong shares fell as investors returned from a holiday break, while Tokyo, Sydney, Wellington and Bangkok also closed lower. Seoul extended gains to a fresh record amid continued technology-sector buying, with Singapore, Manila and Mumbai posting modest advances. European markets opened firmer, with London, Paris and Frankfurt edging higher.
Analysts suggested the rhetoric may be part of a pressure strategy rather than an immediate prelude to conflict, noting that diplomatic channels remain active even as military signalling intensifies.
Shares in Jakarta slipped despite news of a bilateral trade agreement between Washington and Indonesian President Prabowo Subianto. The deal establishes a reduced tariff rate on Indonesian exports to the United States and includes large-scale purchases of US energy, agricultural goods and aircraft.
Key market indicators showed benchmark oil contracts extending gains, while major currencies traded narrowly as investors balanced geopolitical risks against economic signals.
