Global markets experienced declines on Thursday following the U.S. military’s recent defensive strikes against Iranian drone targets near the Strait of Hormuz, escalating geopolitical tensions.
Oil prices rose by more than $2 a barrel after a steep drop the previous day. In early European trading, Germany’s DAX remained nearly flat at 25,175.63, while France’s CAC 40 fell by 0.4% to 8,172.84. The UK’s FTSE 100 decreased by 0.9% to 10,416.62. Futures for the S&P 500 and Dow Jones Industrial Average dipped 0.1%.
U.S. Military Engagements
According to U.S. officials, Central Command forces downed four Iranian one-way attack drones that posed a threat near the Strait of Hormuz. Additionally, the U.S. military targeted an Iranian ground control facility in Bandar Abbas that was preparing to launch a fifth drone, following earlier strikes in the week. Meanwhile, President Donald Trump asserted that Iran is “negotiating on fumes” and indicated that the upcoming midterm elections would not prompt hasty moves toward a resolution of the ongoing conflict.
Asian Markets React
In Asian trading, Japan’s Nikkei 225 experienced a 0.5% drop to 64,693.12, while South Korea’s Kospi also fell by 0.5% to 8,185.29. The Hang Seng index in Hong Kong decreased by 1.3% to 25,006.16, whereas the Shanghai Composite index inched up by 0.1% to 4,098.64. Australia’s S&P/ASX 200 index slipped by 1.4% to 8,592.90, with Taiwan’s Taiex doing the same.
Tan Boon Heng of Mizuho Bank commented, “Conflicting reports on the contours of a U.S.-Iran deal dampened risk sentiments as markets grow increasingly wary about the possibility of a deal.” He noted that while both the U.S. and Iran seem inclined to maintain a ceasefire and are engaging in indirect communications, achieving a meaningful compromise on key issues appears difficult.
Wall Street Performance
On Wednesday, U.S. stock markets reached new heights as oil prices fell over 4%, alleviating pressure on both consumers and businesses globally. The S&P 500 edged up by less than 0.1% to 7,520.36, while the Dow rose 0.4% to 50,644.28. The Nasdaq composite gained 0.1%, reaching an all-time high of 26,674.73. Stocks of companies with significant fuel expenses rallied on the expectation that lower oil prices would bolster profits, with Norwegian Cruise Line Holdings climbing 6.1% and United Airlines increasing by 6.3%. Delta Air Lines rose 3% and also reached new highs.
Oil Market Developments
Brent crude oil prices initially fell 4.6% to $92.25 per barrel as hopes for a ceasefire between the U.S. and Iran appeared to hold amid the military actions. However, following the latest strikes, Brent prices rose early Thursday by $2.14 to $94.44 per barrel. Benchmark U.S. crude gained $2.12, reaching $90.80 after settling at $88.68 on Wednesday, a significant decline.
Prices have stabilized after peaking above $100 a barrel, driven by optimism over a potential agreement that would reopen the Strait of Hormuz, enabling oil tankers to navigate the Persian Gulf once again.
Corporate Earnings Impact
Despite the pressures of inflation and uncertainty stemming from high oil prices, U.S. stocks have reached record levels, attributed in part to unexpectedly strong corporate earnings for the first quarter of 2026. Market forecasts continue to predict robust profits moving forward.
In early Thursday trading, the U.S. dollar rose to 159.50 Japanese yen from 159.51 yen, while the euro fell to $1.1611 from $1.1626.
Published on May 28, 2026
