The European session was dominated by a fresh wave of geopolitical risk as news broke of US strikes on Iranian targets near the Strait of Hormuz. This immediately sent safe-haven flows into gold, pushing it to a new record high above $4,735, while crude oil experienced significant volatility. Despite the Middle East developments, Brent and WTI crude posted losses, indicating that underlying demand concerns and stagflation fears continue to weigh heavily on the market. European equity indices, like the DAX, closed lower, reflecting the cautious mood among investors. The FTSE 100 showed more resilience, closing marginally down.

Ahead of the US open, futures contracts for the S&P 500, Nasdaq, and Dow are largely flat to slightly positive, but this masks a high degree of nervousness. The market is digesting the implications of the US-Iran situation, which could disrupt global trade and energy supplies, while also contending with persistent 'sticky' inflation and slowing growth, a classic stagflationary environment. Recent US jobs data reinforcing these stagflation concerns further dampened sentiment. The pre-market trading suggests investors are in a wait-and-see mode, prepared for potential volatility once the US session officially begins. The strength in copper and natural gas stands out, signaling some underlying commodity demand despite the broader risk-off tone.

For the US session, the primary risk remains the evolving geopolitical situation in the Middle East. Any further escalation or de-escalation of tensions between the US and Iran will be closely watched and could trigger sharp movements across asset classes, especially in energy and safe havens like gold. Investors will also be keen to assess risk appetite, particularly for tech and growth stocks, given the current macro backdrop of rising yields and stagflation fears. There are no high-impact economic data releases today, putting the focus squarely on market sentiment and any Fed speaker comments that might emerge, potentially illuminating the central bank's stance on inflation and growth given the recent jobs report. The earnings reports from Toyota and Intesa Sanpaolo offer limited insights into the US corporate landscape, but broader worries about corporate margins in a high-cost environment will persist.