Asian stock markets mostly rose while oil prices dipped on Friday, driven by hopes of a 60-day ceasefire extension between the United States and Iran.
Oil prices slipped on this de-escalation optimism, yet stayed above pre-war levels as the Strait of Hormuz largely remains closed.
Analysts warned that any potential ceasefire extension should be viewed cautiously, as oil supply recovery will take time. US futures edged lower.
Tokyo’s Nikkei 225 jumped 1.8 per cent to 65,814.96 after data showed May’s core inflation rate rose more slowly than economists expected.
South Korea’s Kospi gained 2.3 per cent to 8,369.81. Both benchmarks are trading near record high levels. Hong Kong’s Hang Seng added 0.4 per cent to 25,098.68, while the Shanghai Composite index fell 0.2 per cent to 4,092.22.
Australia’s S&P/ASX 200 was up 1 per cent at 8,681.80. Taiwan’s Taiex was trading 2.3 per cent higher.
On Thursday, negotiators from the US and Iran reached a tentative deal on extending their ceasefire and holding a new round of talks on Iran’s nuclear program, a US official said. Iran had not yet publicly confirmed the deal and the tentative agreement was still pending US President Donald Trump’s sign off.
Brent crude, the international standard, slipped 0.8 per cent early Friday to $91.97 a barrel. It was trading around $70 per barrel in late February before the war began. Benchmark U.S. crude lost 1.2 per cent to $87.85 per barrel.
Investors are also closely watching for a reopening of the Strait of Hormuz. The US official said the tentative accord makes it clear that Iran wouldn’t be able to impose tolls on ships transiting the strait, while the US would gradually lift its sea blockade on Iranian ports.
“The oil market continues to edge lower amid growing optimism that the US and Iran are moving toward a deal,” ING commodities strategists Warren Patterson and Ewa Manthey wrote Friday. “A reopening of the strait would offer some immediate relief to the oil market with tankers leaving the Persian Gulf. However, the recovery is still uncertain.”
Shipowners may be reluctant to send vessels into the Persian Gulf, at least initially, over fears that the ceasefire could fail, they wrote. Also a recovery in oil and gas production would likely also be gradual rather than immediate.
On Thursday, Wall Street pushed to more records with the benchmark S&P 500 setting another all-time high, climbing 0.6 per cent to 7,563.63. The Dow Jones Industrial Average added less than 0.1 per cent to 50,668.97, and the technology-heavy Nasdaq composite gained 0.9 per cent to 26,917.47.
Shares of discount retail chain Dollar Tree surged 17.9 per cent after it reported stronger-than-expected profit, while department store retailer Kohl’s jumped 20.6 per cent, also after better-than-anticipated results.
In other dealings early Friday, the US dollar rose to 159.30 Japanese yen from 159.24 yen. The euro was trading at $1.1646, down from $1.1651.
