Global financial markets experienced a mixed day on Friday, with Asian shares showing varied performance amidst growing concerns over the substantial investments in artificial intelligence and the potential for a conflict between the United States and Iran. While U.S. futures saw a slight uptick, oil prices resumed their upward trajectory, reflecting the geopolitical tensions.

Worries regarding the risks associated with massive AI investments significantly impacted several sectors. In Tokyo, the Nikkei 225 dropped 1.2% as major banks and financial institutions, particularly those involved with private credit companies lending to businesses vulnerable to AI disruption, saw their shares skid. For instance, Mitsubishi UFJ Financial Group, a partner of Blue Owl Capital—a private credit firm that experienced a 5.9% decline on Thursday—saw its shares fall 2.6%. Other Japanese market heavyweights like Toyota Motor Corp. and Sony also recorded declines of 3.9% and 3.3%, respectively.

The impact of AI-related concerns was also felt in the U.S. market. Booking Holdings, the company behind popular brands like Booking.com and Priceline, suffered a significant 6.1% drop, despite reporting profits that edged past analysts' expectations for the latest quarter. This decline was attributed to fears that AI-powered competitors could disrupt its industry and erode its customer base. The company's stock has already lost approximately a quarter of its value this year. Similarly, Carvana sank 7.9% despite reporting stronger profits than anticipated, while Walmart experienced a fluctuating day, initially gaining 2.7% before closing down 1.4% after its profit forecast for the upcoming year fell short of estimates, despite strong latest quarter results.

Geopolitical tensions, specifically the signals from both the United States and Iran indicating preparedness for war if nuclear program talks fail, fueled a continued ascent in crude oil prices. A barrel of benchmark U.S. crude rose 1.9% to $66.43, and Brent crude added 1.9% to $71.66 per barrel on Thursday. Early Friday, these prices further increased to $66.69 and $71.96 per barrel, respectively.

The rising oil prices led to notable gains among oil companies. Occidental Petroleum, for example, jumped 9.4% after also reporting a stronger profit for the latest quarter than analysts expected. The sustained increase in oil prices could potentially influence the Federal Reserve's decisions on interest rate cuts, as Fed officials have previously indicated a desire to see inflation fall further before supporting additional rate reductions.

Across other Asian markets, the performance was varied. Hong Kong's Hang Seng index lost 0.6% as the market reopened after Lunar New Year holidays, while mainland China and Taiwan markets remained closed. In contrast, South Korea's Kospi surged 2.2%, primarily driven by major defense contractors like Hanwha Aerospace, whose shares soared 8.6%, reflecting a global trend of increased military spending. Australia's S&P/ASX 200 edged 0.1% lower, India’s Sensex added 0.2%, and the SET in Bangkok lost 0.7%.

In the U.S. on Thursday, the broader market saw a slight dip, with the S&P 500 slipping 0.3%, the Dow Jones Industrial Average dropping 0.5%, and the Nasdaq composite losing 0.3%. Economic reports provided a mixed picture: a decrease in U.S. unemployment benefit applications suggested a slowing pace of layoffs, and manufacturing growth in the mid-Atlantic region accelerated. However, the U.S. trade deficit widened in December more than economists had predicted.

In currency and commodity markets early Friday, the dollar strengthened against the Japanese yen, rising to 155.24 yen from 154.99 yen, while the euro slipped against the dollar to $1.1752 from $1.1775. Gold prices saw a 0.5% increase, and silver was up 0.8%.