Global equity indices pushed to new highs on Friday as enthusiasm around artificial intelligence and semiconductor stocks lifted markets in Asia, while oil futures looked set for their steepest weekly fall in almost two months amid reports a deal may allow shipping through the Strait of Hormuz to resume.
Market participants reacted modestly in Asia, with S&P 500 futures little changed after the benchmark closed at another record overnight. Observers were focused on reports that sources said the U.S. and Iran have reached an agreement to extend their ceasefire and remove shipping restrictions - a step that, if implemented, would reduce a major risk premium in crude markets. The deal has not yet received approval from U.S. President Donald Trump, and Iranian state media reported it had not been finalised.
Brent crude eased roughly 50 cents to $93.17 a barrel on Friday, putting the contract on track for a weekly decline of more than 10 percent. The move in oil accompanied a modest pullback in the dollar for the week as U.S. yields retreated, although some analysts cautioned that any agreement between the U.S. and Iran would not automatically reverse broader inflation pressures that were driven higher by elevated fuel costs.
"The market's already taking the view that a deal's going to be done and the strait is going to be open," said Jason Wong, senior market strategist at BNZ in Wellington. "The main point is it removes a tail risk of a really, really bad outcome. I don't think it's a green light to take oil down $20, or Treasuries down 20 points."
MSCI's index of world stocks rose to a record, propelled by a surge in chipmaker shares as investors continued to pile into companies tied to the AI investment theme. Tokyo and Seoul benchmarks climbed about 2 percent in morning trading, contributing to weekly gains.
Dell Technologies provided a striking example of the AI-driven rally. The company's shares jumped 39 percent in after-hours trade when it raised its revenue and profit outlook, citing strong demand from data centres for servers optimised for AI workloads. Market participants debated whether such moves signal the start of a longer cycle of AI investment or simply another leg of an ongoing rally.
"The question now is whether this can continue. We believe we're still in the middle innings of a longer AI-driven investment cycle," said Damian McIntyre, head of multi-asset solutions at Federated Hermes. He added that the firm has revised its S&P 500 target to 8,000 for this year and 9,000 for next year. The S&P 500 had closed Thursday at a record 7,563.63.
Fixed income and inflation data
In fixed income markets, U.S. Treasury yields were steady in Asia trade, with the 10-year at 4.45 percent, marking a weekly drop of roughly 14 basis points. Global bond yields generally moved lower over the week. Investors were awaiting preliminary inflation readings from across Europe and Canadian GDP figures that were due later in the day.
Recent U.S. data showed personal consumption expenditures, income, home sales and GDP softer than expectations, while inflation remained elevated but slightly below some forecasts. Separately, Tokyo's annual core inflation stayed below Japan's 2 percent target for a fourth consecutive month in May, according to data released on Friday, though a rebound in national factory activity hinted at resilience and supported the case for a potential June rate move.
Currency movements and intervention concerns
The yen continued to be monitored closely after earlier weakness prompted reported government intervention in late April and early May. At about 159.26 to the dollar it was trading a touch stronger than the 160 level that authorities have been defending. Japan's finance ministry is due to publish the amount of dollar selling it conducted; some estimates put the total at roughly 8.6 trillion yen, about $54 billion, according to Nomura.
The euro was quoted near $1.1655. The New Zealand dollar has been one of the week's stronger performers, rising 1.8 percent against the U.S. dollar after the Reserve Bank of New Zealand left interest rates on hold but presented a more hawkish outlook than markets had expected.
Market takeaway
Equity markets have been buoyed by appetite for AI-related technology and chip firms, while oil's pullback reflects investor hopes that a reduction in geopolitical risk around the Strait of Hormuz could ease the premium on crude. Yet traders remain cautious pending official confirmation of any U.S.-Iran agreement, and mixed economic data alongside persistent inflation readings continue to leave central bank policy and bond yields in focus.