HONG KONG – Asian equity markets closed out Friday on a robust upward trajectory, with Japan and South Korea’s benchmark indexes climbing to uncharted record highs, driven by growing investor expectations that Washington and Tehran will agree to a 60-day extension of their current ceasefire amid ongoing conflict.
Market sentiment has lifted sharply this week following a revelation from a U.S. official Thursday that negotiators from both sides had reached a tentative agreement that covers both the ceasefire extension and the launch of a new round of negotiations over Iran’s nuclear program. The deal has not yet received public confirmation from Iranian authorities, and still requires formal approval from U.S. President Donald Trump to move forward. Under the terms of the tentative accord, Iran would commit to ending any tolls or restrictions on commercial vessels transiting the Strait of Hormuz, while the U.S. would gradually roll back its existing sea blockade of Iranian ports.
Despite the positive geopolitical breakthrough, oil prices dipped on Friday but remain far higher than they were before the outbreak of the conflict, as the critical global shipping chokepoint of the Strait of Hormuz remains mostly closed for commercial traffic. International benchmark Brent crude fell 1.2% to $91.57 per barrel, while U.S. domestic benchmark crude dropped 1.5% to $87.56 per barrel. For context, both benchmarks traded around $70 per barrel in late February, just before the war began.
Commodities strategists Warren Patterson and Ewa Manthey from ING noted that while rising hopes of a U.S.-Iran deal have pulled oil prices lower from their recent peaks, markets should approach the tentative ceasefire plan with caution. “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,” the pair wrote in a note published Friday. They added that shipowners may initially be hesitant to reroute vessels through the region over fears the ceasefire could collapse, and that any rebound in Iranian oil and gas output will likely be gradual rather than an immediate flood of new supply to global markets.
Across East Asian exchanges, the gains were led by Japan’s Nikkei 225, which jumped 2.5% to close at an all-time high of 66,329.50. The index got an additional boost from new May inflation data showing Tokyo’s core consumer price growth slowed more than economists had forecast, easing pressure on the Bank of Japan to adjust its long-standing loose monetary policy. South Korea’s benchmark Kospi index surged an even stronger 3.6% to close at a record 8,476.15, with the tech sector driving most gains amid the ongoing global artificial intelligence boom. Samsung Electronics, South Korea’s largest listed company, rose 5.8% on the day.
Other regional indexes posted mixed results: Hong Kong’s Hang Seng Index gained 0.9% to 25,222.38, while mainland China’s Shanghai Composite fell 0.9% to 4,063.56. Australia’s S&P/ASX 200 climbed 1.6% to 8,731.70, Taiwan’s Taiex added 2.5%, and India’s Sensex edged down 0.2% in Friday trading. U.S. stock futures ticked slightly higher ahead of the opening bell Friday, after all three major Wall Street indexes closed at fresh records Thursday: the S&P 500 rose 0.6% to 7,563.63, the Dow Jones Industrial Average inched up less than 0.1% to 50,668.97, and the tech-focused Nasdaq Composite gained 0.9% to 26,917.47. U.S. retail stocks outperformed on Thursday, with discount chain Dollar Tree surging 17.9% and department store Kohl’s jumping 20.6% after both posted better-than-expected quarterly profit results.
In currency markets, the U.S. dollar held steady against the Japanese yen on Friday, trading flat at 159.24 yen, while the euro also remained unchanged at $1.1651.