Markets Slump as U.S. Futures Dip, Oil Prices Soar Amid Trump's Beijing Visit

Friday's trading kicked off on a shaky note as U.S. futures stumbled in response to a sharp drop in South Korean stocks. The ripple effect crushed semiconductor shares worldwide, dragging down heavyweights like Samsung Electronics and SK Hynix. Not even Micron Technology was spared in premarket trading, dropping 2.2%.

Over in China, mainland stocks held up better despite the waves of weakness elsewhere in Asia. Investors appeared cautious, weighing in on geopolitical tensions and the fallout from recent economic data releases.

Across the Atlantic, U.S. equity futures lost momentum, with the S&P 500 contracts falling by 0.8% and Nasdaq 100 futures down 1.1%. European markets echoed the mood - Germany's DAX slipped 1.2%, the FTSE 100 was off about 1.18%, and France's CAC 40 dropped 1.17%. Political uncertainties in the U.K., including pressure on Prime Minister Keir Starmer, added to the somber tone.

Oil prices surged by nearly 3%, heading for their biggest weekly gain in a while, as the Strait of Hormuz remains a hot spot. President Donald Trump's statement about losing patience with Iran supplied fresh fuel to worries about energy flow disruptions. Brent crude nudged $108.75, while West Texas Intermediate crude traded around $104.42.

Meanwhile, Trump wrapped up a two-hour meeting with Chinese President Xi Jinping in Beijing. The summit produced few groundbreaking announcements but did offer a softer diplomatic tone. Trump touted "fantastic trade deals" and talked up U.S.-China relations improving, while Chinese state media spoke of new shared understandings and a commitment to keep China's economy open.

Despite the cordial words, market watchers seem unimpressed. As one analyst put it, there was no significant shift in narrative from the summit. The uncertain mix of trade optimism and geopolitical alarms continues to keep traders on edge.

Bond markets mirrored the jitters, with government bond yields rising globally. The U.S. two-year Treasury yield climbed past 4.05%, and the 10-year hovered near 4.52%. Japan's 20-year government bond yield hit levels unseen since 1996, thanks to stronger-than-expected producer price data that spurred bets on continued tightening by the Bank of Japan.

Looking ahead, attention will turn to U.S. industrial production figures for April and the Empire State manufacturing index for May, which could offer some fresh clues on the economic trajectory amid elevated inflation concerns and elevated bond yields.