Asian stock markets experienced significant gains, with Japan's Nikkei share average surging past 71,000 to an intraday record high for the fourth consecutive session. South Korea's KOSPI index also reached a record 9,000.68, while Taiwan's stocks hit an intraday high of 46,565.70. These advances were largely driven by strong performances in semiconductor and AI-related shares, benefiting from improved investor sentiment after the U.S. and Iran signed an interim peace deal.
The interim agreement, which extends a ceasefire by 60 days and allows for full resumption of maritime traffic in the Strait of Hormuz "with no charge," led to a notable drop in oil prices. Benchmark 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. The reopening of the Strait of Hormuz was seen as a significant step towards normalizing crude supply, potentially easing inflation concerns and influencing the U.S. Federal Reserve's monetary policy.
While Asian markets rallied, European trades showed a mixed reaction; pan-region Euro Stoxx 50 futures lost 0.7%, German DAX futures were down 0.4%, and FTSE futures shed 0.6%. U.S. stock futures, however, edged higher 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%. The dollar showed minor fluctuations against other major currencies, with the dollar index largely unchanged at 100.23, holding onto a more than two-month high.
U.S. Treasury yields also reacted, with the yield on benchmark 10-year notes falling 1.76 basis points to 4.445%. The yield on the 2-year note, sensitive to Federal Reserve interest rate expectations, fell 0.12 basis points to 4.162%. Despite market optimism, some analysts, like Yoshimasa Maruyama, chief market economist at SMBC Nikko Securities, cautioned that uncertainties remained regarding the long-term impact of the interim deal.
