Asian stock markets experienced significant rallies, with Japan's Nikkei share average surging past 71,000 for a fourth consecutive session, setting an intraday record. South Korea's KOSPI index reached a record 9,000.68, while Taiwan's stocks also hit an intraday high of 46,565.70. These gains were largely attributed to strong performances in semiconductor and AI-related shares, and the overall optimism stemmed from a U.S.-Iran interim peace deal.
The interim agreement between the U.S. and Iran, which extends a ceasefire by 60 days and includes the full resumption of maritime traffic in the Strait of Hormuz, caused oil prices to drop significantly. U.S. crude futures fell 2.7% to $74.70 a barrel, and Brent crude dropped 2.3% to $77.70 per barrel, marking a three-month low. This decline in oil prices was seen as a potential factor in easing inflation concerns, particularly in energy-importing regions like Europe.
U.S. stock futures also saw gains in Asian trading hours, with S&P 500 E-minis up 0.7%, Nasdaq 100 E-minis rising 1%, and Dow E-minis advancing 0.5%. In contrast, early European trades were mostly down, with the Euro Stoxx 50 futures losing 0.7%, German DAX futures down 0.4%, and FTSE futures shedding 0.6%. Despite the positive market reaction, some analysts, like Yoshimasa Maruyama, Chief Market Economist at SMBC Nikko Securities, cautioned that uncertainties remained regarding the deal.
Bond yields also reacted, with the yield on benchmark U.S. 10-year notes falling 1.76 basis points to 4.445%. The yield on the U.S. 2-year note decreased by 0.12 basis points to 4.162%. The dollar weakened against the yen by 0.02% to 160.59 but the dollar index, which measures the greenback against a basket of currencies, was little changed at 100.23, holding near a two-month high. The euro, however, saw a slight increase of 0.2% against the dollar, reaching $1.1524.
