Global stock markets experienced a mixed day on Friday, despite a generally strong week driven by the interim peace deal between the US and Iran. The optimism surrounding the agreement, which aims to end their war and reopen the crucial Strait of Hormuz to oil tanker traffic, was notably dampened by the postponement of high-stakes talks regarding Iran's nuclear program and the movement of oil through the Strait. This delay led to a faltering rally in several equity markets and a cautious outlook from investors.
The US-Iran deal, signed by President Donald Trump and Iranian President Masoud Pezeshkian and approved by Iran's supreme leader, had initially spurred a market rally, with economies anticipating relief from energy shortages and surging inflation. However, Swiss officials announced the postponement of planned follow-up talks, initially expected to involve the US, Iran, Qatar, and Pakistan. This development, coupled with the cancellation of US Vice President JD Vance's departure for Switzerland, cast uncertainty over the full implementation of the peace agreement.
Oil prices, which had fallen by approximately 10% earlier in the week due to prospects of increased supply, saw a reversal. West Texas Intermediate (WTI) crude climbed about 1.8% to $78.01 per barrel, while Brent North Sea Crude rose 0.9% to $80.53 per barrel. This rise in oil prices was attributed to the stalled talks and the continued muted activity in the Strait of Hormuz, reigniting concerns about energy costs and their impact on global inflation. The Federal Reserve's recent decision to keep interest rates unchanged, coupled with indications of potential rate hikes later in the year to combat persistent inflation, also weighed on investor sentiment.
On the equities front, major indices showed varied performance. Germany's DAX gained 0.2% to 25,079.30, and Paris's CAC 40 was nearly unchanged at 8,467.75. In contrast, Britain's FTSE 100 shed 0.2% to 10,376.64. US futures for the S&P 500 and Dow Jones Industrial Average were both down 0.2%. Asian markets presented a mixed picture; Tokyo's Nikkei 225 closed 0.3% higher at a new record of 71,250.06, while Seoul's Kospi, after a strong start, ended down 0.1% at 9,052.42. The yen strengthened slightly but remained near its weakest level since 1986, trading at 161.30 yen against the dollar.
Despite the day's cautious close, the preceding week had witnessed significant gains, particularly in technology stocks. On Thursday, the S&P 500 rose 1.1%, the Dow Industrials added 0.1%, and the Nasdaq composite surged 1.9%, driven by strong performances from companies like Intel, which surged 10.6% on news of manufacturing chips for Apple in the US, Nvidia (up 3%), and Micron Technology (up 8.7%). However, SpaceX continued its decline, falling 3.6% after its recent stock market debut. Emerging market equities had also touched record highs earlier in the week as shipping began to resume in the Strait of Hormuz, although some of these gains were later erased. The overall sentiment remains a delicate balance between the hope for sustained peace and the looming threat of inflation and monetary tightening.
