A look at the day ahead in European and global markets from Rae

Wee

Markets were in a dour mood on Friday, with Iran flaunting its

grip over the Strait of Hormuz serving as a stark reminder that

the war in the Middle East is far from over.

Iranian state television broadcast on Thursday a video of

commandos in a speedboat storming a container ship, after the

collapse of peace talks that Washington had hoped would reopen

one of the world's most important shipping routes.

Then... just days after saying he would indefinitely extend what

had been a two-week ceasefire with Tehran, U.S. President Donald

Trump announced he had ordered the Navy to "shoot and kill"

Iranian boats laying mines in the strait, and step up demining

activity.

The war's now been going on for about eight weeks and the

U.S. and Iran remain in deadlock.

Investors have swung between hope for an imminent end to the

conflict and fear that it might not come soon at all, and oil

prices continue to push past $100 a barrel while the Strait of

Hormuz stays effectively shut.

While corporate earnings have so far held up reasonably well,

the fragile situation in the Middle East and the oil price

surgepresent risks, keeping executives on their toes.

UK retail sales data for March is due later in the day, which

will provide a sense of the strength of consumer spending amid

the war.

A survey released on Thursday showed British consumer morale

slid this month to its lowest since October 2023, as households

ramped up their expectations for price rises.

British manufacturers have also turned their most pessimistic

since the start of the COVID-19 pandemic and a measure of

expectations for inflation has surged.

Elsewhere in markets, focus was on the yen as it remained a

whisker away from the key 160 per dollar level widely seen as a

trigger for intervention.

Japanese Finance Minister Satsuki Katayama renewed warnings of

currency intervention on Friday, stressing "decisive action" in

close coordination with the United States.

And in a show of the continued artificial intelligence

frenzy, Chinese AI startup DeepSeek started previewing a major

upgrade for its hit AI model on Friday.

Key developments that could influence the markets on Friday:

- UK retail sales (March)

- University of Michigan Consumer Sentiment Index (April)

(Editing by Kate Mayberry)