Oil prices experienced significant volatility as diplomatic talks between the US and Iran progressed. Brent crude initially climbed above $81.50 a barrel following renewed threats from President Trump regarding the Strait of Hormuz and Hezbollah, leading to an initial suspension of talks by Iran. However, as the talks concluded with a roadmap for a final peace deal within 60 days, Brent crude slid 1.7% to $79.20 a barrel. West Texas Intermediate (WTI) crude also saw fluctuations, falling 0.5% to $75.50 a barrel in later trading after an initial rise.
Stock markets presented a mixed picture. The MSCI Asia Pacific Index advanced 0.6%, driven by a rally in technology shares, especially a 1.5% rise in a subgauge of Asian technology shares on optimism surrounding artificial intelligence. Japan's Topix rose 1.2%, and the Shanghai Composite gained 0.2%. Conversely, S&P 500 futures pared early declines but still traded 0.5% lower. Hong Kong's Hang Seng fell 1%, and Australia's S&P/ASX 200 fell 0.1%. Euro Stoxx 50 futures also fell 0.5%.
Mediators Qatar and Pakistan announced that encouraging progress had been made, including a mechanism for further technical talks and a communication line to avoid incidents. Iranian Foreign Minister Abbas Araqchi stated that Iran secured waivers for oil and petrochemical exports and the release of some frozen assets. This progress, despite a confusing start to the talks and President Trump's threats, was interpreted by analysts like Hebe Chen at Vantage Global Prime as a “stepping stone toward lower oil risk, softer inflation pressure, and a cleaner path back into growth and technology shares.” Tony Sycamore of IG, however, highlighted the fragility of the interim agreement as a key risk to stock gains.
Other market movements included gold prices rebounding, rising 0.5% to $4,176.45 an ounce, benefiting from eased inflation concerns. Treasuries dropped, with the yield on 10-year Treasuries advancing three basis points to 4.49%. In currencies, the Bloomberg Dollar Spot Index rose 0.2%, the euro fell 0.1% to $1.1456, and the Japanese yen fell 0.2% to 161.67 per dollar. The offshore yuan was little changed at 6.7819 per dollar.
