U.S. futures were lower in early European trading after climbing in the previous session on soft inflation data that gave fresh hopes the Federal Reserve will hold interest rates at its meeting next month.
Oil rose on continued tensions in the Middle East as the U.S. threatened to maintain a naval blockade of Iran indefinitely. In addition, U.S. Treasury Secretary Scott Bessent raised expectations for measures next week aimed at engineering the "economic isolation" of Iran.
Treasury yields rose, gold fell and is track for weekly loss.
--U.S. Futures were lower after the major indexes closed higher in the previous session and with the S&P hitting a new record close. The Dow Jones Industrial Average was down 0.1%, while the S&P 500 was 0.02% lower and tech-heavy Nasdaq down 0.04%.
--European markets were mixed in early trading, with rises in technology stocks offsetting falls in miners. The Europe-wide Stoxx 600 index was up 0.04%, while Germany's DAX rose 0.6%. The Stoxx Europe 600 technology index was 0.02% higher, led by German software developer Nemetschek, which is up 9.1%. London's FTSE 100 index fell 0.06%, led by miners. Antofagasta, Endeavour Mining, Glencore and Fresnillo shares were down 3.6%, 2.3%, 2.2% and 2.1%, respectively. France's CAC 40 was down 0.02%.
--Asian equity markets were mixed as investors weighed signs of cooling U.S. inflation against President Trump's unveiling of new tariffs on imports of drones and their components. South Korea's Kospi rose 2.4% on the strength of its chipmakers, China's Shanghai Composite Index ended flat and Hong Kong's Hang Seng Index was 1.05% lower.
--The dollar fell as recent U.S. data dampen the prospect of the Federal Reserve raising interest rates while Treasury yields rose as oil prices gain. Last week's weak labor market data combined with this week's subdued consumer and wholesale inflation data have prompted markets to trim U.S. rate-hike bets. Meanwhile, an auction of 30-year Treasurys on Thursday resulted in the highest yield since 2001, highlighting U.S. fiscal concerns. The DXY dollar index fell 0.1% to 99.854. The 30-year Treasury yield rose 1.7 basis points to 5.228% while the 10-year equivalent rose 1.8 basis points to 4.659%, Tradeweb data showed.
--The U.S. sold $25 billion in 30-year Treasurys on Thursday at 5.216%, the highest paid for yields of this maturity since 2001, reflecting concerns over U.S. debt and high inflation. The auction reflected worries over the "growing federal debt burden and inflation that remains above the Fed's target," Danske Bank analysts said in a note. Higher borrowing costs add pressure to public finances as debt servicing already exceeds defense spending, they noted. Earlier this week, 10-year Treasurys were sold at their highest yield since 2007. Thirty-year Treasury yields last trade at 5.230%, up 1.9 basis points on the day, Tradeweb data showed.
--Bitcoin fell as an ongoing stalemate in the U.S.-Iran conflict lifts oil prices and reduces demand for risky assets. U.S. Defense Secretary Pete Hegseth told reporters Thursday the U.S. could maintain its blockade of Iranian ports indefinitely because the U.S. can rotate ships in and out. "Our concern still remains that there is no easy way out of the current crisis," Jefferies economist Mohit Kumar said in a note. Iran won't give up control over the Strait of Hormuz and the U.S. won't accept Iran charging tolls through the shipping route, he said. Iran has time on its side and has a higher tolerance of economic pain, he said. Bitcoin fell 0.4% to $63,140, LSEG data showed.
--Oil prices rose as talks over the Strait of Hormuz stall and the U.S. prepares to send a fresh aircraft carrier to the Middle East. In early European trading, Brent crude gained 1.6% to $88.45 a barrel, while WTI futures were up 1.9% to $82.78 a barrel. Both benchmarks are headed for a weekly gain of nearly 6% after falling in the previous session on a weaker demand outlook and a large build in U.S. stocks. "The lack of a durable Hormuz agreement and continued threats across both Hormuz and the Red Sea should keep a sizeable geopolitical premium embedded in oil prices," said Soojin Kim, analyst at MUFG. Meanwhile, the U.S. military is preparing to replace the USS Abraham Lincoln with the USS George Washington as part of a scheduled Middle East deployment, The Wall Street Journal reported, citing U.S. officials.
--Gold prices are headed for a modest weekly loss as investors took profits after this week's rally. In early European trading, New York gold futures fell 0.8% to $4,385.90 a troy ounce. Prices surged above the $4,400 mark this week as softer inflation data reduce expectations of a rate-hike by the Federal Reserve in September. "The broader uptrend remains intact, but both markets have now failed to hold recent highs, suggesting some profit-taking after the sharp rally," analysts at Sucden Financial said. According to the CME's FedWatch tool, traders are now pricing in only a 32% chance of a rate hike next month. A lower interest-rate environment tends to support gold by reducing the opportunity cost of holding the nonyielding asset.
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