Asian stocks advanced on Friday as investors pinned hopes on progress in US-Iran peace talks, while the US dollar hovered near a six-week high amid growing expectations of higher global interest rates.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.8%, putting it on track for a modest weekly gain. Japan’s Nikkei surged 2.8%, close to a record high, while Taiwan equities climbed 2.3%. US stock futures also edged higher after strong earnings from major technology firms, including Nvidia, improved market sentiment.
Investor attention remained fixed on negotiations involving Iran, particularly concerns surrounding the Strait of Hormuz, a key route for global energy supplies. US Secretary of State Marco Rubio said there had been “some good signs” in talks to end the nearly three-month-old conflict involving Iran, though disagreements over Tehran’s uranium stockpile and control of the strait persisted.
Oil prices remained volatile as traders weighed the chances of a breakthrough. Brent crude rose 1.9% to US$104.56 a barrel, while US West Texas Intermediate gained 1.35% to US$97.64. Despite Friday’s rebound, Brent was still heading for a weekly decline of about 6%.
The sharp rise in energy prices has shifted market expectations on interest rates, with traders now pricing in possible US Federal Reserve rate hikes before year-end instead of earlier expectations for two rate cuts.
“We’re seeing an unusually strong linkage between oil prices and global rates,” said Mitch Reznick, head of fixed income at Federated Hermes.
The stronger rate outlook boosted the dollar, which also benefited from safe-haven demand. The yen weakened to 159.11 against the dollar, nearing the psychologically important 160 level that previously triggered intervention by Japanese authorities.
