Asian stock markets are nearing all-time highs, buoyed by optimism that the reopening of the Strait of Hormuz will restore oil supplies and help ease inflationary pressures.
The MSCI Asia Pacific Index steadied after a five-day winning streak.
South Korea's KOSPI index led gains in the region on Friday, rising 2.6% to set another record high, bolstered by a continued rebound in chip stocks.
Japan's Nikkei 225 index climbed as much as 1.2% earlier in the session before paring some of its advance.
Markets in the United States and China were closed on Friday for holidays.
The Philadelphia Semiconductor Index surged over 6% on Thursday, with Intel Corp (INTC.US) shares jumping more than 10%.
This followed remarks from former U.S. President Donald Trump indicating that Intel would collaborate with Apple Inc (AAPL.US) on the design and manufacturing of semiconductors in the United States.
Key Global Events This Week
Global markets navigated a pivotal week featuring a landmark U.S.-Iran agreement, the first policy meeting under Federal Reserve Chair Kevin Warsh, and the Bank of Japan's decision to raise interest rates to their highest level since 1995.
Despite these significant developments, equities demonstrated resilience, with the MSCI All-Country World Index gaining 1.3% and on track for its best weekly performance this month.
Oil Market Dynamics
Brent crude traded around $79 a barrel on Friday.
Oil prices have fallen approximately 9% this week, as a provisional peace accord between the U.S. and Iran has allowed for the gradual normalization of shipping through the Strait of Hormuz, alleviating an unprecedented supply shock in the global crude market.
Market attention is now shifting to negotiations over Iran's nuclear program and the sustainability of the ceasefire agreement.
"With the U.S.-Iran deal providing some risk relief, investors appear to be turning a blind eye to the potential for Fed rate hikes," said Hiroshi Namioka, chief strategist at T&D Asset Management in Tokyo.
"Nevertheless, the market's heavy reliance on tech stocks remains a concern. Micron Technology Inc's earnings next week will be a litmus test for this rally; a miss could trigger a significant sell-off in the chip sector."
The U.S. Central Command announced on Thursday the lifting of its blockade on traffic to and from Iranian ports and coastal areas.
Concurrently, former President Trump posted on the Truth Social platform that "oil is flowing."
U.S. Vice President Vance downplayed concerns that Iran might eventually impose tolls on the critical energy waterway.
The recent sell-off in crude has nearly erased all the gains futures contracts made since the U.S. and Israel initiated military action against Iran in February.
"We've seen dramatic swings in oil this week, partly due to the near-instantaneous resumption of Iranian supply," said Tony Sycamore, a market analyst at IG Australia.
"Execution risk is next. There are still many details to be finalized."
Bond and Central Bank Moves
The yield on the 2-year U.S. Treasury note stabilized around 4.18% on Thursday.
In the previous session, it had surged 13 basis points to a one-year high as markets aggressively priced in future rate hikes following a perceived "hawkish pause" from the Federal Reserve.
However, the price of the 30-year U.S. Treasury rose, pushing its yield down 3 basis points to 4.9%, signaling market confidence that inflation will be contained over the long term.
There was no cash trading of U.S. Treasuries in Asia due to the U.S. holiday.
The Bank of England held its benchmark rate steady at 3.75% on Thursday, describing the recent retreat in oil prices as "encouraging."
However, two of the nine monetary policy committee members, concerned about persistent inflation, voted for an immediate 25-basis-point hike.
Currency and Commodity Markets
In foreign exchange markets, the Japanese yen remains a central focus.
Japan's Finance Minister, Tsuyoshi Katayama, stated on Friday that the government is prepared to take bold action against speculative moves as the yen approaches a four-decade low.
Meanwhile, gold is poised for a third consecutive weekly decline, as bets on the Federal Reserve's hawkish stance and rate hike prospects have overshadowed the optimism generated by the peace deal.
The U.S. dollar index held steady, on course for a weekly gain.
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