European stock markets recovered from their morning losses on Friday, easing concerns about a potential escalation of the conflict between Iran and Israel. Investors were once again on edge due to the latest developments in the Middle East, with reports of Israel attacking Iran in response to a prior major attack. Despite no initial reports of damage, fears of a conflict in the region and uncertainty surrounding U.S. interest rate policy continued to affect the stock market.
Throughout the afternoon, European stock exchanges showed signs of stabilization as both Iran and Israel appeared to be attempting to de-escalate tensions. However, concerns about inflation and interest rate policies persisted, remaining a focal point for markets in Europe and overseas.
While technology companies and chip manufacturers faced losses, major European stock indexes showed improvement. The Swiss leading index SMI rebounded, indicating that investors may be cautiously optimistic about the future of European markets. However, overall, markets remained cautious as technology companies prepared for what could be a challenging earnings season.
In Japan, the Nikkei 225 index experienced a significant decline due to fears of an escalating conflict in the Middle East. This impacted stocks of Japanese suppliers to the semiconductor industry but boosted stocks of logistics companies as investors anticipated higher freight rates in the event of war. Korean and other Asian stock exchanges also saw losses, with Japan’s record-breaking streak temporarily halted due to global market volatility caused by tensions between Iran and Israel. Despite this recent downturn, analysts at Nomura believe that markets may respond positively to economic strength and robust corporate profits starting in May as investors become more optimistic about future prospects for global economies after months of uncertainty caused by COVID-19 pandemic measures and geopolitical tensions.
