Oil surge weighs on global markets as Middle East tensions intensify

US equities ended Friday under pressure as rising oil prices heightened inflation concerns amid escalating Middle East tensions. The S&P 500 fell 0.50%, while the Dow lost 653 points and the Nasdaq closed broadly flat. Treasury yields rose following the previous session’s strongest performance in more than a year. Financial shares weakened, with Morgan Stanley down 2.40% and JPMorgan falling 1.50%. American Express shed 3.70% despite exceeding earnings expectations. Concerns about the debt required to finance artificial intelligence infrastructure continued to weigh on technology shares. For the week, the S&P 500 declined 1% and the Nasdaq lost 2.10%, while the Dow gained 296 points.

Oil prices were a key focus, with crude rising above US$103 a barrel on Friday as concerns grew that the US could resume strikes against Iran. Reports of potential further US and Israeli action, continued attacks by Iran-allied Houthi militants, and security concerns in Saudi Arabia added to supply worries. Crude gained more than 1.50% over the week. Higher energy prices also heightened inflation concerns ahead of the Federal Reserve’s interest rate decision. US year-ahead inflation expectations were confirmed at 4.70% in October 2026, up from 4.60% in September, while five-year expectations rose to 3.50% from 3.40%.

European equities extended their losses. The Stoxx 50 fell around 0.50% to a more than four-month low, ending the week down over 2%, while the Stoxx 600 also lost 0.50%. Germany’s DAX declined about 0.80% to 25 152, with weaker-than-expected growth momentum in the October private-sector data adding to concerns over inflation and geopolitical tensions. France’s CAC 40 fell 0.40% to 7 783, while the UK’s FTSE 100 lost around 0.50%. Energy shares outperformed as oil prices climbed. Moody’s maintained France’s long-term foreign-currency sovereign credit rating at Aa3 but retained a negative outlook, citing slower growth, a higher deficit and challenges to fiscal consolidation.

In the euro area, median expectations for price growth over the next 12 months edged up to 3.10% in September 2026 from 3% in August. Expectations for inflation three and five years ahead remained unchanged at 2.90% and 2.50%, respectively. Expectations for economic growth weakened, while the anticipated unemployment rate increased.

Asian markets were mixed. China’s Shanghai Composite advanced by 0.89% as state-backed ETF buying supported a rebound, although it remained down 0.69% for the week. Hong Kong’s Hang Seng gained 0.70% on Friday but remained on course for a weekly decline of around 5%. Japan’s Nikkei fell 0.34%, bringing its weekly loss to 4%, as technology shares remained under pressure.

South African equities closed lower on Friday. The JSE All Share fell 0.47% to 108 020.14, while the Top 40 declined 0.55%. Resources lost 1.26% and Metals and Mining fell 2.24%; Industrials and Financials slipped 0.18% and 0.20%, respectively. The rand weakened against the major currencies; the US dollar rose 0.66% against the rand to R16.60, while the pound gained 0.37% to R22.18 and the euro advanced 0.42% to R18.58.

In commodities, Brent crude moved 2.76% higher to US$116.29 a barrel at 19h09 SAST, while at 19h24 SAST, gold fell 0.76% to US$3 993.15 an ounce. Silver declined 1.18% to US$53.88 an ounce and platinum lost 1.12% to US$1 559.10 an ounce.