Economy
Stocks sink, oil at multi-month highs after Israel’s strikes on Iran
Global stock markets plunged on Friday while oil prices soared to near multi-month highs after Israel launched a military strike on Iran, triggering Iranian retaliation and fueling a flight to safe-haven assets like gold, the U.S. dollar and the Swiss franc.
The escalation in the Middle East – a major oil-producing region – adds uncertainty to financial markets at a time of heightened pressure on the global economy from U.S. President Donald Trump’s aggressive and erratic trade policies.
Market reaction, which had abated in early European trade, gathered a renewed momentum as the session wore on.
Brent crude oil prices were last up almost 9% at $75.54 per barrel, having jumped as much as 14% during Asian hours. They were set for their biggest one-day jump since 2022, when energy costs spiked after Russia’s invasion of Ukraine.
U.S. oil futures rose almost $6 to $73.91.
Israel claimed it had targeted Iran’s nuclear facilities, ballistic missile factories and military commanders on Friday at the start of what it warned would be a prolonged operation to prevent Tehran from building an atomic weapon, while Iran has promised a harsh response.
Iran had launched about 100 drones toward Israeli territory in retaliation. Washington said it was not involved in the Israeli offensive.
World leaders urged restraint, while Trump urged Iran to make a deal over its nuclear program, saying that there was still time for the country to prevent further conflict with Israel.
Eyes on oil flow
The National Iranian Oil Refining and Distribution Company said oil refining and storage facilities had not been damaged and continued to operate.
The primary concern was whether the latest developments would affect the Strait of Hormuz, said SEB analyst Ole Hvalbye. The key waterway had been at risk of impact from increased regional volatility previously but had not been affected so far, Hvalbye said.
There also was no impact on oil flow in the region so far, he added.
About a fifth of the world’s total oil consumption passes through the strait, or some 18 million to 19 million barrels per day (bpd) of oil, condensate and fuel.
Analysts at consultancy Sparta Commodities said that any significant crude supply disruptions would lead to sour crude grades being marginally priced out of refineries in favor of light sweets.
Under a worst-case scenario, JPMorgan analysts said on Thursday that closing the strait or a retaliatory response from major oil-producing countries in the region could lead to oil prices surging to $120-$130 a barrel, nearly double their current base case forecast.
“The key question now is whether this oil rally will last longer than the weekend or a week – our signal is that there is a lower probability of a full-blown war, and the oil price rally will likely encounter resistance,” said Janiv Shah, analyst at Rystad.
“Fundamentals show nearly all Iranian exports going to China, so Chinese discounted purchases would be most at risk here. OPEC spare capacity can provide the stabilizing force,” he added.
An increase in oil prices would also dampen the outlook for the German economy, the economic institute DIW Berlin said on Friday. It is the only G-7 nation that has recorded no economic growth for two consecutive years.
“The increased uncertainty speaks in favour of a higher risk premium on the oil price, which is why it is unlikely to fall below $70 on a sustained basis for the time being … Fundamental data is taking a back seat in the current situation,” analysts at Commerzbank said in a note.
Safe-haven rush
In other markets, stocks dived and there was a rush to safe havens such as gold and the Swiss franc.
Gold, a classic safe haven at times of global uncertainty, rose 1% to $3,416 per ounce, bringing it close to the record high of $3,500.05 from April.
The rush to safety was matched by a dash out of risk assets. U.S. stock futures fell over 1%, European shares dropped almost 1% and in Asia, major bourses in Japan, South Korea and Hong Kong fell over 1% each.
“Clearly the big question is how far does this go?,” said Chris Scicluna, head of economic research at Daiwa Capital Markets in London, referring to the Middle East tension.
“The market has got it right in terms of stocks down, oil and gold up.”
The developments mean another major geopolitical tail risk has now become a reality at a time when investors are wrestling with major shifts in U.S. economic and trade policies.
“The geopolitical escalation adds another layer of uncertainty to already fragile sentiment,” said Charu Chanana, chief investment strategist at Saxo, adding that crude oil and safe-haven assets will remain on an upward trajectory if tensions continue to intensify.
The Israeli shekel fell almost 1.7% and long-dated dollar bonds for Israel, Egypt and Pakistan slipped.
Two-way pull for bonds
U.S. Treasuries initially benefited from the rush for safer assets, but as the day wore on focus turn to the inflationary impact of oil.
U.S. 10-year Treasury yields were last up 2.6 basis points (bps) at 4.38%, having touched a one-month low of 4.31%. Bond yields move inversely to prices.
“This is a flight-to-safety event. But markets are struggling a bit and in the fixed income space you have an oil-price shock that is inflationary and so you should see markets expecting an even more hawkish Fed,” said James Rossiter, head of global macro strategy at TD Securities.
“On the other hand, you have the flight-to-safety, which should push bond yields lower.”
Germany’s 10-year bond yield touched its lowest level since early March at around 2.42%, before also moving higher.
Daiwa’s Scicluna said a further push higher in oil prices could dampen expectations for central bank rate cuts.
“The ultimate response in bond markets to geopolitics is going to depend on how sharp the rise in energy prices is going to be,” he said.
Some traders were attracted to the dollar as a haven, with the dollar index up 0.8% to 98.50, retracing most of Thursday’s sizable decline.
The Swiss franc briefly touched its strongest level against the dollar since April 21, before trading 0.5% lower at around 0.8144 per dollar.
Fellow safe haven the Japanese yen fell 0.6% to 144.33 per dollar, giving up earlier gains of 0.3%.
The euro was down 0.8% at $1.15, after rising on Thursday to the highest since October 2021.
“Traders are now on edge over the prospects of a full-blown Middle East conflict,” said Matt Simpson, a senior market analyst at City Index.
“That will keep uncertainty high and volatility elevated.”
Drones hit a data center owned by Russia’s Yandex, the country’s leading AI and technology company said on Thursday, in the first major attack on a Russian data hub since the start of the war with Ukraine.
Yandex later Thursday said it could not yet determine whether equipment at the center could be restored.
Mutual drone attacks by Russia and Ukraine this year have gradually spread across the economy, from energy facilities and refineries to ports and vessels carrying oil and grain, e-commerce warehouses and, most recently, data centers.
Russia has conducted a strike campaign on Ukrainian data centers and telecommunications infrastructure over the past month, including targets in central Kyiv.
Yandex said the attack on its Sasovo hub, one of its five large data centers, caused a fire and forced it to suspend operations at the site, which hosts tens of thousands of servers.
The company, often dubbed “Russia’s Google,” said its core consumer services were not affected, but did not describe the extent of the damage.
“The scale of the damage to the infrastructure is still being assessed,” Yandex said in a statement later on Thursday. “For the moment, we cannot confirm whether it is possible to restore the data center equipment in Sasovo.”
On the website of its Yandex Cloud service, the company advised customers there were problems with the electricity supply to one data center “zone” and recommended using others.
Yandex said in 2021 that the Sasovo hub hosted two of its three supercomputers built around Nvidia A100 chips, which it uses to train its YandexGPT large AI model. Yandex declined to say whether the supercomputers were affected by the attack.
Multiple online services in Russia reported technical issues on Thursday, including real estate aggregator Cian, a book portal called Litmarket, and the websites of Russian Railways and professional football club Spartak Moscow.
A state-owned bus company in the Moscow region said online ticket sales were currently unavailable due to the “temporary shutdown of a data center.”
Online monitoring service Detector404 said it had received 58,268 user complaints over the past day. Yandex shares at the Moscow Exchange, where it is a proxy stock for the Russian technology sector, were down 3%.
Previous Ukrainian attacks on Russia have led to fuel shortages and queues at petrol stations, losses for tens of thousands of small businesses involved in e-commerce, and higher inflation as rising fuel costs feed through to consumer prices.
Critically important infrastructure
Russian President Vladimir Putin in August gave the state the power to take control of critically important infrastructure if it is deemed to be poorly protected from drone attacks.
There were previously no confirmed major Ukrainian drone attacks on Russian data centers.
Russia’s RBC news outlet reported on Thursday, quoting sources, that businesses were in talks with the government on developing data centers in countries deemed “friendly” by Moscow.
Some Ukrainian data centers were forced to suspend operations after sustaining damage, while 100,000 households suffered temporary internet outages after one attack.
Ukraine’s digital minister told Reuters last month that the country was moving digital infrastructure underground in response to Russian attacks.
Yandex, which created Russia’s first search engine in 1997 and is one of the few major Russian companies not under Western sanctions, runs YandexGPT, one of Russia’s leading AI models, as well as a cloud computing service and a range of other consumer products, including Yandex Taxi and Yandex Music.
Sberbank, Yandex’s main domestic competitor, which is developing the rival GigaChat model, says Russian AI developers lag their U.S. and Chinese counterparts by six to nine months, with difficulties in importing advanced chips due to sanctions seen as the main bottleneck.
U.S. President Donald Trump, who has said he wants the term “super intelligence” to replace artificial intelligence, said Thursday that anyone who does not heed his wishes will be treated as “THE ENEMY,” without saying what the consequences would be.
“The White House considers anyone that uses the term, ‘Artificial Intelligence,’ as opposed to the highly accepted new and more accurate term, ‘Super Intelligence,’ THE ENEMY!” Trump said in a post on his Truth Social network.
Trump mentioned his proposed name change in a speech before the U.N. General Assembly last month, saying his new term “sounds much better.”
Then in late September, Trump signed an executive order, imposing the use of “super intelligence” across the U.S. government.
That same obligation does not affect the private sector, but some there are already adopting it, including Mark Zuckerberg’s Meta group.
Trump ally Elon Musk is using “super intelligence” in his posts on his social media network X.
Musk has already announced plans to rename his AI company SpaceXAI to SpaceXSI.
The security pledge signed by major AI companies at the White House at the end of September also used the term “super intelligence.”
Industry heavyweights OpenAI and Anthropic, meanwhile, continue to use the well-known term “artificial intelligence” widely.
Even on Truth Social, a link to the platform’s own search function – “Truth Search AI” – remains visible alongside Trump’s post.
The semantic debate is primarily a political one: the U.S. president, who has stridently defended the use of AI, is trying to put a positive spin on it in the face of mounting worries about AI security and anger over the proliferation of data centers in the U.S.
More generally, Trump is a fan of renaming things or creating nicknames: he now calls the Gulf of Mexico the “Gulf of America” and has converted Lake Ontario into “Lake America.”
Lufthansa Group and three Indian airlines said Thursday they would suspend flights to Riyadh, as Yemen’s Iran-aligned Houthis renewed threats against carriers after claiming an attack on the Saudi capital’s airport.
A Lufthansa spokesperson told Reuters the German group’s airlines would suspend flights to Riyadh through Oct. 16 due to “current developments in the Middle East.”
India’s largest airline IndiGo said it had canceled all flights to and from Riyadh until Oct. 9.
Air India and Akasa Air also told Reuters they had canceled all flights to and from the Saudi capital until Oct. 10.
Air India added that a flight from Delhi to Riyadh returned to the Indian capital on Thursday, while Akasa Air canceled two scheduled services.
Smoke was seen rising from a stationary aircraft at Riyadh airport earlier on Thursday, according to a witness and three people briefed on the matter.
Houthis said they had struck King Khalid International Airport in Riyadh with a ballistic missile, although there was no immediate confirmation from Saudi authorities.
Saudi authorities said on Wednesday that three people had been killed this week in strikes on Riyadh airport and Abha airport in the southwest.
Several dozen international flights bound for Riyadh on Thursday evening have been canceled, data from global flight tracker FlightRadar24 showed.
Data compiled by aviation analytics firm Cirium showed 49.7% of departures from Riyadh airport had been canceled by 1500 GMT, with a further 31 cancelations expected across Saudi airports on Friday.
Türkiye has doubled its share of global manufacturing value added (MVA) over the past two decades, according to Industry and Technology Minister Mehmet Fatih Kacır, who tied it to the country’s bolstering its infrastructure and industrial transformation in the same period.
Speaking at the ACE BPSC 2026 conference in Istanbul on Wednesday, Kacır said engagement with American businesses was an important component of bilateral relations.
Held under the auspices of the Trade Ministry and hosted by the Turkish-American Business Association (TABA-AmCham), the ACE BPSC 2026 summit brought together officials and industry leaders in Istanbul from Oct. 7-9, with the aim of shaping the new direction of global trade.
“We have doubled our share of global manufacturing value added thanks to the strong production infrastructure we have built over the past 20 years,” Kacır said.
Annual goods exports have risen from $36 billion in 2002 to $283 billion, he added, also highlighting Türkiye’s role in European value chains.
The minister also recalled that under Presidents Recep Tayyip Erdoğan and Donald Trump, Türkiye and the U.S. share the political will to deepen economic ties and advance toward their $100 billion bilateral trade target.
Innovation, industrial transformation
Türkiye has more than 1,700 R&D and design centers and over 13,000 companies operating in 115 technology parks, Kacır said.
He also said that its R&D workforce has increased from 29,000 in the early 2000s to 311,000.
Moreover, he highlighted advances in defense manufacturing and electric vehicle brand Togg, saying Türkiye aimed to move higher in global technology value chains.
Cooperation with the World Bank has provided more than $1 billion for industrial companies, smaller businesses and green technology startups, he said, adding that work with the European Bank for Reconstruction and Development (EBRD) has also advanced efforts to secure 5 billion euros ($5.59 billion) for green transformation investments.
Data centers, space ambitions
At the same time, the minister said Türkiye aims to expand data center capacity to 1 gigawatt (GW) by 2030 and mobilize at least $10 billion in private investment in AI, cloud technologies and digital infrastructure.
He said assembly and integration of Türkiye’s lunar spacecraft had been completed, with launch planned for early 2027.
He also recalled that Türkiye has joined the Artemis Accords and is developing a spaceport in Somalia.
Among others, he highlighted the Zangezur Corridor, Development Road and Northern Marmara Railway as projects strengthening trade connections.
Inviting U.S. investors to participate, Kacır called for concrete projects, stronger investment flows, deeper technology cooperation and lasting commercial partnerships.
Growing U.S. trade
Also addressing the event, Trade Minister Ömer Bolat emphasized that the U.S. is an important partner for Türkiye and said that the total trade volume between the two countries was $38.6 billion last year and that the U.S. had a trade surplus of $6 billion.
Bolat pointed out that Türkiye-U.S. trade has nearly doubled in the past 10 years, with trade volume rising from about $21 billion in 2015 to $38.6 billion.
“In terms of tourism, 1.6 million American tourists come to Türkiye annually, and from Türkiye around 260,000 people travel to America each year,” he said.
He also said that Turkish Airlines flies to 14 cities in the U.S., with 23 daily flights.
Delivering the opening address at the summit, TABA-AmCham President Süleyman Ecevit Sanlı, for his part, highlighted that this was the first time the American Chambers of Commerce in Europe (ACE) had gathered in Istanbul.
“Our role as TABA-AmCham is very simple: to connect people with great opportunities and to keep doors open for the business world,” he said.
He also underscored several priorities and expectations when looking forward, including the need to modernize the Customs Union between Türkiye and the European Union, to lift transit quotas, and “to remove all bans and eliminate visa and transit barriers so that our businesspeople can travel freely within both the European Union and the United States.”
The export climate for Turkish manufacturers continued to improve in September, rising further from an already positive reading a month earlier, a survey showed on Thursday.
The Manufacturing Sector Export Markets Climate Index, which tracks the performance of Türkiye’s top export markets, rose to 53.2 in September, the Istanbul Chamber of Industry (ISO) said in a bulletin.
This marked the improvement from 52.7 recorded in August and was the highest reading in 52 months, or more than four years.
Any reading above the index’s threshold of 50 indicates an improvement in the export climate, while readings below 50 indicate deterioration.
The reading indicated that the improvement in demand conditions across export markets accelerated for the fifth consecutive month. The index has remained above the 50 threshold every month since January 2024.
In September, production increased in nine of Türkiye’s 10 largest export markets, except for Poland, ISO said.
In the U.S., economic activity “increased strongly,” with growth accelerating to its fastest pace in more than five years, according to the chamber.
Meanwhile, signs of improvement continued across European economies as well.
Production continued to increase in Germany, the U.K., Italy, Spain, Romania and the Netherlands. In France, economic activity increased for the first time in more than two years, albeit only modestly. Exports to these European economies account for 34% of Türkiye’s total manufacturing exports.
Strongest increase recorded in UAE
Among all the economies covered by the survey, the United Arab Emirates (UAE) recorded the strongest increase in production. Growth in the UAE reached its fastest pace since February, just before the start of the war in the Middle East.
In addition to the UAE, economic activity in several other Middle Eastern countries also ended the third quarter on a positive note.
Saudi Arabia, Kuwait and Lebanon recorded growth. In contrast, production continued to decline in Qatar, while Egypt experienced a significant contraction. The decline in Egypt was the sharpest among all the economies monitored in the survey in September.
Commenting on the results, Andrew Harker, Economics Director at S&P Global Market Intelligence, said: “The acceleration in global economic activity seen throughout the third quarter continued in September.”
“The strong increase in economic activity in the U.S., with growth reaching its fastest pace in more than five years, was a major factor behind this acceleration. The improvement in operating conditions was not limited to the U.S. The number of European economies recording expansion increased, while the UAE led the way in terms of growth. Manufacturers hope that the recent improvement in export demand will continue throughout the remainder of 2026,” he added.
The Atlantic puffin, barn owl, buff-tailed bumblebee and European hedgehog will feature on the next series of banknotes, the Bank of England has announced.
The first denomination from the new series will be launched over the next few years, the bank said.
It added that the process of designing, testing and printing banknotes to make sure they are high-quality, resilient and accessible takes years.
As the designs are only in very early stages, they will be unveiled closer to their launch.
The decision on which animals to include was made after nearly 500,000 people responded to a public consultation.
They chose from a shortlist of 18 options across three categories – mammals, birds, and amphibians, insects and fish – developed in collaboration with a panel of U.K. wildlife experts.
The bank used the feedback from the consultation to decide on the four animals. There will be one for each denomination of banknote.
The barn owl, buff-tailed bumblebee and European hedgehog were the most popular animals in their respective categories.
The bank said that the Atlantic puffin was selected because it was the most popular marine animal.
It said the inclusion of a marine animal will add variety to the series, making the denominations easier to distinguish and giving an opportunity to celebrate the British coastline.
The red fox, which was in the mammals category, received more nominations than the Atlantic puffin, with 244,651.
In the birds category, the common kingfisher also received more nominations than the Atlantic puffin, at 211,277 compared with 183,137 for the Atlantic puffin.
The bank has said previously it would not necessarily choose the four animals that receive the highest number of responses.
It said that is important the animals represent different environments from across the U.K.
The bank said the decision on which selected animal will feature on which denomination will be made in due course and announced closer to launch.
The animals selected will feature as the central imagery but the bank said other elements from nature will also be included.
Other shortlisted animals may also potentially be included to complete the designs, it added.
Historical figures who have helped shape thought, innovation, leadership and values have been showcased on Bank of England banknotes since 1970.
The first of the current series has been in circulation since 2016, when 5 pound banknotes featuring Winston Churchill were issued.
The current series of banknotes in circulation also features Jane Austen on the 10 pound banknote, JMW Turner on the 20 pound and Alan Turing on the 50 pound.
The rise in payment technologies such as contactless and mobile wallets has given people an increasing array of alternatives to banknotes and coins.
On June 3, the bank launched a consultation asking the public which animals they would prefer to see used as the central images on the next series of banknotes.
The consultation ran for a month and received 478,531 responses.
The bank said it is the most responses that it has ever received to a banknote imagery consultation.
Those responding placed 2,549,003 selections across the shortlist of 18 animals.
The next series of banknotes will also continue to include a portrait of the monarch.
Victoria Cleland, Bank of England chief cashier, said: “I am delighted that nearly half a million people responded to our wildlife imagery consultation, showing that cash still matters.
“I would like to thank everyone who engaged, including those who I met at our events.
“With their support, we have chosen four distinct and inspiring animals that not only showcase the great variety of wildlife we have in the U.K. but will also enhance the security of our banknotes.”
Rhys Phillips, the bank’s incoming chief cashier who will be responsible for delivering the new series of notes, said: “It’s fantastic to see how engaged the public have been in this choice.
“With these animals as the focus for the design, we can deliver a new series of banknotes that are secure and represent the U.K. at its best.
“We’ll now work to design, test and produce the banknotes, combining the imagery we’ve announced today with cutting-edge security features and materials science.”
The shortlisted animals for the 2026 wildlife imagery consultation are below, with the number of nominations they received in brackets:
Mammals
European hedgehog (259,665) Red fox (244,651) Brown hare (130,614) Grey seal (92,043) Pine marten (82,773) Bottlenose dolphin (48,847)
Birds
Barn owl (270,596) Common kingfisher (211,277) Atlantic puffin (183,137) Great-spotted woodpecker (86,839) White-tailed eagle (46,109) Eurasian curlew (44,521)
Amphibians, insects and fish
Buff-tailed bumblebee (360,399) Emperor dragonfly (143,894) Common frog (120,382) Marsh fritillary butterfly (108,467) Basking shark (69,699) Atlantic salmon (45,090)
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