Markets across Asia slipped on Friday, and oil prices climbed higher after Donald Trump warned that the US could take military action against Iran if nuclear talks fail.
The comments raised fresh fears about tensions in the Middle East. Investors, who were just starting to recover from an earlier AI-driven market sell-off, turned cautious again.
Trump made the remarks during the first meeting of his new “Board of Peace” initiative, which aims to bring stability to Gaza. He said Iran must agree to a “meaningful deal” in nuclear negotiations.
“It’s not easy to make a meaningful deal with Iran,” he said. “But we have to. Otherwise, bad things happen.”
He also hinted that the US could go further if talks don’t work out. “You’re going to be finding out over the next probably 10 days,” he added.
The US has already moved warships, fighter jets, and other military equipment to the region.
Meanwhile, Israeli Prime Minister Benjamin Netanyahu warned that if Iran attacks Israel, the response would be devastating.
All this comes just days after the US and Iran held a second round of talks in Geneva, with mediation from Oman. Washington wants to stop Iran from developing a nuclear weapon. Tehran says it is not trying to build one.
The possibility of conflict in the oil-rich Middle East has pushed oil prices up sharply this week. On Friday, prices rose again, staying near their highest levels since June.
Stock markets reacted nervously.
In Hong Kong, shares fell as trading resumed after a three-day holiday. Markets in Tokyo, Sydney, Wellington, and Manila also dropped.
But Seoul stood out. It climbed to a new record high, helped by strong buying in tech stocks.
Some analysts believe the situation may not lead to actual fighting.
Matt Simpson, a market analyst at City Index, said the US move looks more like pressure than a clear step toward war.
He explained that the US is showing it has military options if talks fail, but that doesn’t mean an invasion is coming. Diplomatic talks are still happening, which suggests both sides may still want a peaceful solution.
Elsewhere, shares in Jakarta slipped even after the US and Indonesia reached a new trade deal.
Trump and Indonesian President Prabowo Subianto agreed on a 19% tariff on Indonesian goods entering the US. Earlier, Indonesia had faced the threat of a 32% tariff.
As part of the deal, Indonesia agreed to buy $33 billion worth of US energy, farm products, and aircraft, including planes from Boeing.
In the US, investors are also waiting for fresh economic data later in the day. Recent reports have been stronger than expected. That has boosted confidence in the economy, but it has also reduced hopes that the Federal Reserve will cut interest rates soon.
At the close of trading:
- The Dow in New York fell 0.5%.
- London’s FTSE 100 dropped 0.6%.
- Japan’s Nikkei 225 was down 1.3%.
- Hong Kong’s Hang Seng Index slipped 0.4%.
Oil prices edged higher:
- West Texas Intermediate rose to $66.62 per barrel.
- Brent crude climbed to $71.86 per barrel.
Currency markets were mostly steady, with small moves in the dollar, euro, pound, and yen.
For now, markets are watching closely. The next few days — especially those “next 10 days” Trump mentioned — could be key.
