Asian Markets Rally as Hopes Grow for Extended U.S.-Iran Ceasefire

BY COMFORT OGBONNA

Asian stock markets traded mostly higher on Friday as investors reacted positively to expectations that the United States and Iran could extend their fragile ceasefire agreement by another 60 days, easing fears of a wider regional conflict and helping improve global market sentiment.

Investor optimism spread across regional equities after reports emerged that negotiators from both countries had reached a tentative understanding to prolong the ceasefire and continue discussions surrounding Iran’s nuclear program. Although the agreement still awaits formal approval from U.S. President Donald Trump and has not yet been publicly confirmed by Tehran, traders welcomed the possibility of reduced geopolitical tensions in the Middle East.

The improving outlook helped support gains across several major Asian indexes, even as analysts warned that the situation remains delicate and could shift quickly if negotiations break down.

Oil prices moved lower on expectations that tensions in the region may gradually ease, though crude remained significantly above levels seen before the outbreak of the conflict earlier this year. Market participants continued to monitor developments surrounding the Strait of Hormuz, a vital global shipping route that remains largely closed despite diplomatic progress.

Analysts cautioned that while a ceasefire extension could reduce immediate fears of supply disruptions, the recovery of oil exports and shipping activity is expected to be slow and uncertain. Energy traders noted that many shipping companies may remain reluctant to send vessels into the Persian Gulf until there is greater confidence that the ceasefire will hold over the longer term.

In Japan, Tokyo’s Nikkei 225 index surged 1.8% to close at 65,814.96 after fresh economic data showed that Tokyo’s core inflation rate in May rose at a slower pace than economists had anticipated. The softer inflation reading strengthened hopes that the Bank of Japan may avoid aggressive monetary tightening in the near future, boosting investor appetite for equities.

South Korea’s Kospi index climbed 2.3% to 8,369.81, with technology and semiconductor shares leading gains as global risk sentiment improved. Both the Nikkei and Kospi are trading close to record highs, reflecting continued confidence in Asian markets despite ongoing geopolitical uncertainty.

Hong Kong’s Hang Seng Index added 0.4% to 25,098.68 as investors welcomed signs of easing tensions between Washington and Tehran. However, mainland Chinese shares were more subdued, with the Shanghai Composite Index slipping 0.2% to 4,092.22 amid concerns over slowing domestic economic momentum and cautious investor positioning ahead of further policy signals from Beijing.

Australia’s S&P/ASX 200 rose 1% to 8,681.80, supported by gains in mining and energy companies, while Taiwan’s Taiex index advanced 2.3% as technology exporters benefited from renewed optimism across global markets.

The tentative ceasefire agreement reportedly includes provisions aimed at reopening shipping access through the Strait of Hormuz. According to U.S. officials familiar with the negotiations, Iran would not impose tolls on vessels passing through the strategic waterway, while the United States would gradually ease its naval blockade on Iranian ports.

The Strait of Hormuz remains one of the world’s most critical energy chokepoints, with a substantial portion of global oil and liquefied natural gas shipments passing through the narrow corridor. Any disruption to traffic in the area has immediate implications for energy prices, inflation expectations, and global economic growth.

Brent crude futures, the international benchmark for oil prices, fell 0.8% in early Friday trading to $91.97 per barrel. Despite the decline, prices remain sharply higher compared with the roughly $70 per barrel level seen in late February before the conflict erupted. U.S. benchmark West Texas Intermediate crude dropped 1.2% to $87.85 per barrel.

Market analysts said traders remain cautious despite the recent pullback in prices. Concerns persist that renewed military tensions or setbacks in negotiations could quickly reverse the downward trend in oil markets.

Strategists at ING said that while optimism over a possible agreement has pressured oil prices lower, uncertainty surrounding the durability of the ceasefire continues to limit stronger declines. They also warned that oil and gas production in the region may take time to recover fully even if shipping routes reopen.

Meanwhile, Wall Street continued its strong momentum overnight, with major U.S. indexes pushing further into record territory. The benchmark S&P 500 gained 0.6% to finish at another all-time high of 7,563.63, supported by strong corporate earnings and continued enthusiasm surrounding artificial intelligence and technology stocks.

The Dow Jones Industrial Average edged up less than 0.1% to 50,668.97, while the Nasdaq Composite advanced 0.9% to close at 26,917.47.

Retail stocks were among the strongest performers in the U.S. market. Shares of discount retailer Dollar Tree jumped 17.9% after the company posted stronger-than-expected quarterly profits and raised its outlook. Department store chain Kohl’s also rallied sharply, climbing 20.6% following earnings results that exceeded analyst expectations.

Currency markets showed relatively modest movements on Friday. The U.S. dollar strengthened slightly against the Japanese yen, rising to 159.30 yen from 159.24 yen late Thursday. The euro traded at $1.1646, slightly lower than its previous level of $1.1651.

Investors are expected to remain focused on developments surrounding the U.S.-Iran negotiations in the coming days, as any progress toward a lasting agreement could influence global oil prices, inflation trends, and overall market stability.