Asian markets rose on Friday as investor sentiment improved on hopes of progress in US-Iran peace talks, although rising oil prices and continued uncertainty over the Strait of Hormuz overshadowed inflation concerns.Tokyo led regional gains, with Japan’s Nikkei 225 up more than 2 percent. Taiwan’s bourse rose about 1.5 percent, while Hong Kong, Shanghai, Sydney, Seoul, Wellington, Jakarta, Bangkok, Manila, Singapore and Kuala Lumpur also traded in positive territory.MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.3 percent and was on track for a modest weekly gain.
Sentiment improves on optimism over US-Iran talks
Investor confidence was supported by signs of progress in diplomatic efforts aimed at ending the conflict in the Middle East.US Secretary of State Marco Rubio said there were “some good signs” in the talks, although differences remain over Iran’s uranium reserves and control over the Strait of Hormuz.“I believe the Pakistanis will travel to Tehran today. So hopefully that will take it further,” Rubio said.However, US President Donald Trump warned earlier this week that talks were at the “borderline” between a peace deal and renewed military action.Trump said, “If we don’t get the right answers, it’s over very quickly. We’re all ready to go.”
Oil prices remain volatile
Despite optimism in equities, oil prices continued to fluctuate sharply amid fears of prolonged supply disruptions.Brent crude rose nearly 2 percent to above $104 a barrel, while U.S. West Texas Intermediate climbed to nearly $98 a barrel.Markets are concerned about the near-closure of the Strait of Hormuz, a vital passage that normally carries about a fifth of global energy supplies.Higher oil prices have forced traders to reevaluate global interest rate expectations, with markets now anticipating a possible US Federal Reserve rate hike later this year rather than earlier expectations of a cut.“We’re seeing an unusually strong correlation between oil prices and global rates,” Federated Hermes’ Mitch Reznik was quoted as saying by Reuters. He said central banks may need to keep policies tight for a longer period of time to control inflation.
Samsung wage settlement, Japan’s inflation in focus
In South Korea, Samsung Electronics workers began voting on a temporary pay agreement, helping avert a planned 18-day strike, news agency AFP reports.The proposed deal includes a new stock-linked bonus pool for semiconductor employees.However, Samsung Electronics shares fell more than 1.5 percent in Friday’s trading.Meanwhile, Japanese government data showed core inflation slowed to 1.4 percent in April, below market expectations, complicating the Bank of Japan’s future rate hike plans.On Wall Street, sentiment remained cautiously positive overnight. The Dow Jones closed 0.6 percent higher, although Nvidia shares fell 1.8 percent despite strong earnings, while Walmart fell sharply after releasing a cautious consumer outlook.