Falling oil prices and expectations of higher U.S. interest rates reshaped global markets, lifting Asian equities while strengthening the dollar.
Asian stock markets surged on Friday, with Japan and South Korea reaching fresh record highs as easing tensions in the Middle East pushed oil prices lower. At the same time, a hawkish Federal Reserve boosted the U.S. dollar, sending the Japanese yen to its weakest level in two years.
KEY DETAILS
The reopening of the Strait of Hormuz after an interim peace agreement between the United States and Iran helped restore oil shipments and ease concerns about global supply disruptions.
Brent crude fell 1% to $79.03 per barrel and was down 9.5% for the week.
Japan’s Nikkei gained 0.8%, marking its fifth consecutive record close and bringing its weekly gain to 8.5%. South Korea’s benchmark index jumped 3.1%, extending its weekly advance to 15.3%.
Investors also reacted to the Federal Reserve’s latest outlook. While rates remained unchanged, nine of 19 policymakers signaled further rate hikes this year. The U.S. Dollar Index climbed to 100.78, putting it on track for a 1% weekly gain.
The stronger dollar pushed the Japanese yen to 161.26 per dollar, its weakest level since July 2024, increasing speculation that Japanese authorities could step into currency markets.
MARKET REACTION
Forex: The dollar strengthened broadly, while the yen fell to a two-year low. The British pound slipped 0.1% to $1.3195.
Stocks: Asian equities rallied, though Wall Street futures edged 0.2% lower. Intel shares surged 10% after President Donald Trump said Apple would work with the company to design and manufacture chips in the U.S.
Commodities: Gold fell 0.5% to $4,188 per ounce, while silver dropped 0.8% to $65.30 as the stronger dollar weighed on precious metals.
WHY IT MATTERS
Lower oil prices are easing inflation concerns worldwide, but expectations of higher U.S. interest rates continue to support the dollar and pressure other currencies. Traders are closely watching whether Japan intervenes to slow the yen’s decline.
Markets will now focus on the durability of the Iran peace agreement, future oil flows through the Strait of Hormuz, and any signals from the Federal Reserve regarding additional rate hikes. Currency traders will also be watching for signs of action from Japanese authorities as the yen remains under pressure.
Stay ahead of every market-moving headline - start trading with a broker built for moments like this: TradeQuo.com
Source: Reuters
