Asian stocks stayed near record highs in holiday-thinned trading as optimism that the reopening of the Strait of Hormuz will restore oil flows and curb inflation pressures buoyed risk appetite.
The MSCI Asia Pacific Index was up 0.1% after five straight days of gains. The tech sector stood out once again as South Korea’s chip-heavy Kospi jumped more than 2% to lead gains in Asia. A measure of the chip shares in the US surged over 6% to an all-time high, led by Intel Corp., after President Donald Trump said the company would work with Apple Inc. to design and manufacture semiconductors in the country.
However, US equity futures dropped after the S&P 500 Index climbed 1.1% and the Nasdaq 100 gained 2.5% on Thursday. Markets in the US, China, Hong Kong and Taiwan are shut for holidays today. The S&P 500 has risen in 11 of the past 12 weeks.
Global markets are wrapping up a pivotal week marked by a landmark US-Iran agreement, Federal Reserve Chair Kevin Warsh’s first policy meeting and the Bank of Japan’s decision to raise interest rates to the highest level since 1995. Stocks remained resilient despite the barrage of market-moving events, with MSCI Inc.’s index of world shares up 1.3% in what’s poised to be its best week this month.
Brent traded around $79 a barrel on Friday. Prices have tumbled about 9% this week as the US-Iran interim peace deal saw shipping through the Strait of Hormuz start to return to normal, easing the global crude market’s biggest ever supply shock. Attention now shifts to talks over Tehran’s nuclear program and the durability of the ceasefire.
"Risks have receded after the US-Iran deal, and it’s almost like investors are turning a blind eye to the likelihood of Fed rate hikes,” said Hiroshi Namioka, chief strategist at T&D Asset Management in Tokyo.
"That said, the market is relying heavily on tech for gains, which is somewhat concerning. Micron’s earnings next week will serve as a litmus test for the rally, and if they miss, we’ll likely see a sharp selloff in the chip sector.”
The US Central Command announced Thursday that it had lifted the blockade on traffic to and from Iranian ports and coastal areas, while Trump posted on Truth Social that "oil is flowing.”
US Vice President JD Vance told reporters at the White House that the 60-day clock for working out the contentious details in the so-called memorandum of understanding had started ticking.
Two-year Treasury yields steadied around 4.18% on Thursday, after surging 13 basis points to hit the highest in over a year in the previous session, when traders ramped up bets on future interest-rate hikes following the Fed’s hawkish hold.
However, 30-year US notes rallied in a sign the market believes inflation will be contained over the longer term, with yields declining three basis points to 4.9%. There is no cash trading in Treasuries during Asian hours due to the US holiday.
Meanwhile, in the UK, Andy Burnham won a historic contest for an open parliamentary seat, paving the way for the Greater Manchester mayor to challenge Prime Minister Keir Starmer for his job.
On Thursday, the Bank of England held rates at 3.75%, saying the recent drop in oil prices was "encouraging,” even as two of the nine policymakers voted for an immediate quarter-point hike over concerns of persistent inflation.
The Japanese yen remained a key focus in foreign-exchange markets. Finance Minister Satsuki Katayama said the government can take bold action against speculative moves, as the currency trades not far from the weakest level in four decades.
Elsewhere, gold was on track for a third weekly loss as a hawkish Fed and rate-hike bets outweighed the optimism over the peace deal. A gauge of the dollar was steady and on course for a weekly advance.
Crude’s recent selloff means that futures have given back almost all of the gains triggered by the war, which erupted in February when the US and Israel attacked Iran over its nuclear program.
"The repricing this week has been drastic and part of that came about because of the resumption of Iranian oil almost instantaneously,” Tony Sycamore, a market analyst at IG Australia, said on Bloomberg Television. "What comes next is the execution risk. There’s a lot of details still to be nutted out.” - Bloomberg
