Asian stocks displayed stability, and oil prices experienced a dip on Thursday as investors evaluated an interim peace deal between the United States and Iran, despite lingering uncertainties and a statement from US President Donald Trump. While MSCI's broadest index of Asia-Pacific shares outside Japan remained flat, Japan's Nikkei share average surged past the 71,000 level to a new record high, driven by gains in semiconductor and AI-related shares. South Korean shares also rose by 0.9%, and U.S. S&P 500 e-mini futures were up 0.81% at 7,484.8.
Conversely, Wall Street saw a decline across all three major indexes overnight, falling by approximately 1% or more. This downturn was attributed to traders' expectations of a potential rate hike by the Federal Reserve, as new Fed Chair Kevin Warsh emphasized the necessity of curbing inflation, and other policymakers hinted at rising interest rates later in the year. The Dow Jones Industrial Average dropped by 0.98% to 51,492.55, the S&P 500 fell by 1.21% to 7,420.10, and the Nasdaq Composite decreased by 1.34% to 26,021.66.
Oil prices witnessed a decline, with U.S. crude dipping 1.25% to $75.83 per barrel and Brent crude falling 1.4% to $78.41 per barrel. This drop was influenced by the perceived easing of geopolitical supply concerns following the US-Iran peace deal, which includes a commitment to restore safe navigation through the Strait of Hormuz. The accord also outlines a 60-day negotiation period for a broader framework addressing sanctions relief and Iran's nuclear program. This diplomatic progress could lead to an increase in Iranian crude supply, thereby exerting downward pressure on prices.
Bond markets also reacted to these developments. The benchmark 10-year Japanese government bond yield increased by 2 basis points to 2.620%, nearing its highest close since June 16. The yield on benchmark 10-year Treasury notes in the US rose to 4.471%, up from its Wednesday close of 4.463%. The 2-year yield, sensitive to expectations of higher Fed funds rates, touched 4.1759% compared to its US close of 4.163%. The dollar strengthened against the yen, rising 0.01% to 160.65, reaching its highest level since July 2024, while the dollar index fell 0.03% to 100.32, and the euro gained 0.1% to $1.1511.
