Global stocks held near record highs on Friday as international tensions remained simmering, and the dollar held near a six-week high as traders reduced bets on interest rate cuts by the Federal Reserve.
Safe-haven gold was little changed, while oil prices rebounded from an earlier decline after US President Donald Trump adopted a wait-and-see attitude after previously threatening to intervene.
International politics has been the main focus of the markets since the beginning of the year, following Trump’s actions in Venezuela, threats to take control of Greenland and tensions in the Middle East.
“While it appears that for now we have somewhat reduced the likelihood of US intervention in the Middle East, I don’t think we can completely rule it out,” said Michael Brown, senior research strategist at Pepperstone.
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Holiday in the US limits market activity
Market participants may lack conviction ahead of the U.S. Martin Luther King Jr. Day holiday on Monday, Brown noted.
“I wouldn’t be entirely confident if I were managing long risk or short crude oil positions heading into a three-day weekend with this level of tension in the Middle East,” he added.
The pan-European Stoxx 600 index fell 0.1%, having hit a record high on Thursday. The index was on track to close its fifth consecutive week positive, extending gains made at the end of 2025 into the new year.
France’s CAC 40 fell 0.7%, lagging regional peers due to political uncertainty.
The French government on Friday postponed talks on its 2026 budget after lawmakers failed to reach a compromise.
US stock futures pointed to a solid start on Wall Street, where a week full of results will conclude with those of State Street.
In Asia, technology-heavy indices in Taiwan and South Korea hit record highs as results from Taiwanese chipmaker TSMC reignited enthusiasm for artificial intelligence.
The United States and Taiwan reached a trade deal Thursday that reduces tariffs on many exports from the semiconductor giant, directs investment toward the American technology industry and risks irritating China.
“I guess yesterday’s TSMC report was pretty strong and upbeat, and certainly gave a much-needed boost to AI stocks that have been struggling on Wall Street in recent months,” said Tony Sycamore, markets analyst at IG.
In the United States, pre-market trading showed that semiconductor stocks were on track to extend their AI-driven rally, with companies such as Intel and Nvidia posting slight gains.
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Operators attentive to possible intervention in the yen
The yen gained attention in currency markets after Japan’s Finance Minister Satsuki Katayama said on Friday that Tokyo is not ruling out any options to counter excessive exchange rate volatility, including intervention together with the United States.
His comments slightly boosted the yen, which extended gains following a Reuters report that some Bank of Japan officials see room to raise interest rates sooner than markets expect, with April a clear possibility.
The dollar was last down 0.3%, settling at around 158 yen.
The yen has been sold off on the prospect of a move in Japan as soon as next month, which investors bet could lead to expanded fiscal stimulus from Prime Minister Sanae Takaichi.
The dollar held near a six-week high following this week’s US economic data, which included figures showing an unexpected drop in new jobless claims.
Against a basket of currencies, the dollar stood at 99.21, near Thursday’s high of 99.493, its highest level since early December.
Markets have priced in a 20% chance of a Fed rate cut in March, up from around 50% a month ago.
In oil markets, prices rose slightly as risks to supply remained in focus, despite the decreasing probability of a US military attack on Iran.
Brent crude and U.S. West Texas Intermediate were both trading about 1.2% higher.
Spot gold held steady around $4,611 per ounce, recovering some of the earlier losses.
With information from Reuters.
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