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Global Market Today: Asian stocks rise on US-Iran truce deal, oil drops
Gauges in Japan and South Korea climbed, sending the MSCI Asia Pacific Index higher by 0.7%. That came after the S&P 500 Index and the Nasdaq 100 Index rallied to a record close. Optimism toward AI remained high with Dell Technologies Inc. surging almost 38% in extended trading on its sales outlook.
Helping the sentiment, Brent crude dropped 0.4% to around $93.40 a barrel on Friday, following a deal to extend the ceasefire by 60 days and launch further talks on Tehran’s nuclear program, which raised hopes that the three-month conflict may be nearing a resolution. President Donald Trump has yet to agree to the terms.
The yen was steady around 159.25 per dollar after Tokyo’s key inflation gauge unexpectedly cooled for a sixth straight month. During the US session, Treasury yields fell across the curve and the dollar weakened against all major developed-market currencies.
Optimism over a ceasefire extension outweighed concerns about clashes in the Persian Gulf, as investors bet a truce may ease disruptions to energy flows. The closure of the Strait of Hormuz since the war began has curbed oil shipments and stoked inflation fears, with markets now eagerly watching for any signs the vital corridor may reopen.
“Markets continue to get whipsawed by swings in Iran war sentiment,” said Elias Haddad at Brown Brothers Harriman & Co. “Regardless, risk-on sentiment should remain supported because both sides are still talking to work out a deal that would ultimately reopen the Strait of Hormuz.”
Both countries have previously hailed progress, with Trump repeatedly indicating the US was close to securing an agreement — only for the stalemate to drag on.When asked if an interim deal had been clinched, Treasury Secretary Scott Bessent would only say “the teams have been going back and forth.” He insisted Trump’s three “red lines” — reopening Hormuz, Iran turning over highly enriched uranium and ending its nuclear program — remained necessary for a pact.
“Even if it is only a 60-day agreement to allow a resumption of traffic in the Strait, there should be a relief rally, as serious supply dislocations are approaching rapidly,” said veteran strategist Louis Navellier.
Optimism toward artificial-intelligence stocks has helped equities rally to new highs, placing the S&P 500 Index on track for a ninth straight week of gains — a streak matched only four times since 1985. Asian shares are also set for a second week of gains.
At the same time, higher energy costs have fueled price pressures, raising concerns the Federal Reserve would be forced to lift interest rates. US consumer spending edged up in April, with annual inflation accelerating to the highest since 2023. Meantime, the economy expanded in the first quarter at a 1.6% annualized pace, slower than previously estimated.
“The economy is still expanding, but hotter inflation limits the Fed’s flexibility and pushes rate cuts further out,” said Gina Bolvin at Bolvin Wealth Management Group. “This is a more difficult environment for investors because the growth story is cooling just as inflation is heating back up.”
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Traders were also digesting unprecedented demand for shares in SpaceX, which raised $75 billion in an initial public offering and jumped about 20% in its Nasdaq debut.
The euro was little changed at $1.15725, hovering near a one-week high and set for a weekly gain after the European Central Bank delivered its first interest rate hike in three years on Thursday.
PEACE DEAL
Leaked terms of a proposed memorandum to end the war in the Gulf, outlined by Western, Pakistani and Iranian sources on Friday, appeared to favor Iran, drawing criticism from U.S. President Donald Trump who called the reports inaccurate. Trump’s announcement on Thursday regarding a deal had prompted Wall Street shares to rally, oil prices to slip and the U.S. dollar to fall.
Markets are pausing as they assess the prospects for peace and the impact of the SpaceX IPO, with investors watching whether funds will shift from equities or cash, said John Velis, FX and macro strategist at BNY.
“The hoped-for good news on the ceasefire in the Middle East had a big reaction overnight and I think we came in this morning and we have the SpaceX IPO and a bunch of central bank meetings next week,” Velis said.
The U.S. dollar was up 0.18% against Japan’s currency at 160.225 yen, holding near a key level that often triggers concern about intervention from Tokyo.
The pound was steady at $1.34145. Data showing the UK economy contracted in April had little impact, with markets focused on Iran talks.
The U.S. dollar index, which measures the greenback against a basket of six currencies, was flat at 99.75 after hitting a one-week low on Thursday.
Investors have tended to buy the safe-haven dollar when tensions in the Iran war flare, and sell it in favor of riskier assets such as stocks when peace talks appear to make progress.
FED IN VIEW
Data on Thursday showed U.S. producer prices increased more than expected in May, ahead of Kevin Warsh’s first rate-setting meeting as chair of the Federal Reserve next week.
Traders expect the Fed to keep rates steady at 3.5% to 3.75%, but see a greater than 50% chance of a hike by year-end. Pricing edged slightly lower on Thursday after Trump’s comments on a potential deal.
Against the Swiss franc, the dollar strengthened 0.21% to 0.79680.
In cryptocurrencies, bitcoin gained 0.40% to $63,595.26. Ethereum declined 0.29% to $1,665.87.
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Brent futures were down $3.34, or 3.7%, at $87.04 a barrel by 1035 CDT (1535 GMT), while U.S. West Texas Intermediate (WTI) crude dropped $3.11, or 3.55%, to $84.60. Both contracts were at their lowest prices since April 17.
“The market thinks we’re closer to the deal,” said Phil Flynn, senior analyst with Price Futures Group.
A memorandum between the U.S. and Iran to halt the war in the Gulf could be signed as soon as Sunday, a Western source told Reuters on Friday, with Geneva emerging as the likeliest venue.
Iran’s Fars news agency, however, citing a source close to the negotiations, denied that speculation.
U.S. President Donald Trump called off his threatened air strikes on Thursday, while Iran’s Mehr news agency reported that final negotiations on the memorandum would focus on nuclear and economic issues but would exclude discussions about Iran’s missile programme.
Iran’s IRNA news agency, meanwhile, said nuclear talks would take place within a 60-day period after a memorandum was signed. “Headlines are driving the market once again as confidence grows that an eventual deal will be struck and the Strait (of Hormuz) reopens,” said Tamas Varga, an analyst at PVM Oil Associates.
The caveat, however, is that global and regional oil stocks are still low and could drift lower, even with a deal, as it would take time to ensure uninterrupted oil flows, he added.
On Thursday, Iran announced a complete closure of the strait, saying it would fire on any ship trying to pass through the waterway. Traffic through the strait, which normally carries a fifth of global oil and liquefied natural gas shipments, has been extremely limited as a result of the war.
The U.S. military, however, said on social media that commercial ships continued to transit the waterway.
“We believe the market reaches an inflection point in late July if we do not see oil flows resuming before then,” ING analysts said in a note. “This is when inventory levels and seasonally stronger demand push prices significantly higher towards $120-130 per barrel.”
Goldman Sachs lowered its 2027 average Brent forecast to $80 a barrel on higher supply and lower demand, but expects prices to exceed the 2025 average on stockpiling of OECD commercial oil stocks and a security premium for disruptions.
The Organization of the Petroleum Exporting Countries lowered its forecast for 2026 world oil demand growth to 970,000 barrels per day on Thursday from a previous 1.17 million bpd – its second straight downward revision.
The producer group also said consumption would eventually rebound. It expects oil demand in 2027 to rise by 1.73 million bpd, up 190,000 bpd from its previous forecast.
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