Asian stock markets advanced sharply on Friday as gains in artificial intelligence-linked technology shares followed Wall Street's record closing levels, and reports that the United States and Iran were nearing a draft deal to extend a ceasefire helped improve risk sentiment.
Shares tied to AI and semiconductors took direction from U.S. markets, where the S&P 500 and the NASDAQ Composite reached record closing highs overnight, driven in part by strong performances among companies linked to AI. During Asian trading hours, U.S. stock index futures were largely unchanged.
Regional market moves
Japan's Nikkei 225 climbed 2.6%, moving to levels just shy of the record highs seen earlier in the week, while the broader TOPIX index rose 2.0%. South Korea's KOSPI surged 3.2%, reaching near-record territory as semiconductor and AI-related names led gains. In Hong Kong, the Hang Seng index increased about 1.0%, and the Hang Seng TECH sub-index advanced roughly 1.7%.
Elsewhere in the region, China's Shanghai Composite slipped 0.4%, and the blue-chip Shanghai Shenzhen CSI 300 traded flat. Singapore's Straits Times Index rose 1.0%, India's Nifty 50 remained largely unchanged, and Australia's S&P/ASX 200 gained about 1.3%.
Ceasefire reports and oil market reaction
Investor risk appetite was bolstered after reports indicated that Washington and Tehran had reached a draft agreement to extend their ceasefire for 60 days while continuing negotiations on Iran's nuclear programme and regional security issues. The reported framework would still require approval from U.S. President Donald Trump, and Iranian media noted that the framework had not yet been finalised.
The set of reports helped ease some concerns about heightened tensions near the Strait of Hormuz, an important shipping lane for global oil flows. Oil prices fell for a second consecutive session, with Brent crude headed for what would be its steepest weekly decline in nearly two months.
Macro backdrop and Japan data
Despite the rally, market participants remained cautious as U.S. inflation readings pointed to persistent price pressures. Data released on Thursday showed that the personal consumption expenditures price index - the Federal Reserve's preferred inflation gauge - rose at its fastest annual pace in three years in April.
In Japan, new data added nuance to the economic picture. Tokyo core inflation slowed to 1.3% in May, remaining below the Bank of Japan's 2% target and reinforcing expectations that the central bank will move carefully on policy normalisation. Industrial data showed factory output rose 0.9% in April from the prior month, an unexpected rebound despite concerns about rising energy costs and supply-chain disruptions associated with Middle East tensions. Retail sales increased 2.1% in April from a year earlier, matching March's pace and outperforming market forecasts of 1.4% growth.
What this means for market segments
- Technology and semiconductor stocks continued to be the main drivers of gains in regional equity benchmarks.
- Energy markets reacted to easing geopolitical fears, with oil prices declining amid the ceasefire reports.
- Japanese consumption and industrial activity readings showed pockets of resilience, which may affect local policy expectations.
Investors will likely monitor further developments on the U.S.-Iran negotiations and upcoming economic indicators for additional signals on risk appetite and central bank policy paths.