Global stock markets entered a holding pattern on Friday following a volatile week. Although a significant mid-week rally, triggered by a US-Iran ceasefire agreement, propelled the S&P 500 to its strongest weekly performance in nearly a year, investors are closely awaiting the outcome of weekend negotiations to determine if the fragile truce can evolve into a lasting deal.
US stock index futures were largely flat on Friday. For the week, the S&P 500 has gained approximately 3.7%, the Dow Jones Industrial Average is up 3.6%, and the Nasdaq Composite has advanced nearly 4.3%, positioning it for its best weekly performance since November 2025. The Europe Stoxx 600 index edged up 0.1%, following a generally positive session in Asian markets. Brent crude oil prices rose 1.5% to $97 per barrel on Friday but remained at lower levels following a sharp decline earlier in the week.
On Thursday, former President Trump expressed optimism regarding the progress of talks but simultaneously issued a warning to Iran, demanding it cease collecting tolls in the Strait of Hormuz. The two-week ceasefire agreement reached on Tuesday initially sparked a sharp stock market rally and a rapid decline in oil prices. However, doubts about the truce's practical implementation persist; Kuwait's Foreign Ministry disclosed Thursday evening that Iran and its proxy forces had launched a new wave of drone attacks targeting key facilities within Kuwait.
Beyond geopolitical uncertainty, investors on Friday are also focusing on the US March Consumer Price Index (CPI) data to assess the extent to which energy price shocks stemming from the Iran conflict are feeding into inflation. US Treasury prices are poised to end a four-day winning streak, while the US dollar strengthened slightly by 0.1%, albeit still recording its largest weekly decline since January.
European markets opened mixed. The Stoxx Europe 50 index opened up 0.14%, Germany's DAX index rose 0.46%, Britain's FTSE 100 index fell 0.11%, and France's CAC 40 index gained 0.04%.
US stock index futures were essentially flat.
Japan's Nikkei 225 index closed up 1.8% at 56,924.11. The Topix index closed down 0.04% at 3,739.85. South Korea's KOSPI index closed 1.4% higher at 5,858.87.
The US Dollar Spot Index increased by 0.1%. The Japanese Yen fell 0.2% to 159.29 per US dollar. The South Korean Won extended losses against the dollar, declining 0.7%. The yield on the US 10-year Treasury note rose 2 basis points to 4.30%. The yield on Japan's 20-year government bond climbed 4 basis points to 3.325%. WTI crude oil gained 2% intraday to $99.84 per barrel, while Brent crude rose 1.9% to $97.73. Spot gold fell 0.3% to $4,752.73 per ounce. Bitcoin declined 0.9% to $71,763.04.
The fragility of the ceasefire continues to weigh on market sentiment. The primary driver of market movements this week has been the sustainability and evolution of the US-Iran ceasefire. On Tuesday night, former President Trump agreed to extend the deadline for Iran to reopen the Strait of Hormuz by two weeks. This news fueled a rally on Wednesday, with the three major US stock indices all jumping more than 2%, and the Dow Jones recording its largest single-day gain since April 2025.
However, the truce's fragility was soon exposed. Fighting persisted in the region on Wednesday, with US and Iranian forces only largely suspending most strikes thereafter. Israeli Prime Minister Benjamin Netanyahu subsequently agreed to commence talks with Lebanon "as soon as possible," but Iran's Parliament Speaker Mohammad Bagher Ghalibaf immediately stated that Israel's continued strikes on Lebanon constituted a violation of the US-Iran ceasefire. News of the drone attacks on Kuwait further clouded the outlook for the truce.
Analysts note that investors appear eager to overlook concerns about the ceasefire's fragility as long as former President Trump does not signal a re-escalation of hostilities. However, this also suggests the current equity rebound may be overextended—the market is focused on the potential for a lasting peace while overlooking the ongoing supply-side impacts caused by the conflict.
Some institutions are maintaining their positions, focusing on the direction of negotiations. Faced with an uncertain weekend outlook, market participants are divided on adjusting their portfolios. Some managers indicate they are not reducing exposure ahead of the weekend, believing the broader trend is currently toward diplomacy rather than combat.
Alongside geopolitics, the US March CPI data, released on Friday, serves as another key market catalyst. Economists surveyed anticipate a significant monthly increase, the largest since 2022, which will provide a crucial gauge for assessing how energy price shocks are transmitting to consumer inflation, thereby influencing expectations for the Federal Reserve's policy path.
In Asian markets, Japan's Prime Minister announced plans to tap strategic petroleum reserves starting in May, a move interpreted as a precautionary step against energy supply uncertainty. In Europe, investors are also monitoring regional inflation data to assess the conflict's impact on consumer prices. European stocks, which closed lower on Thursday reflecting ongoing concerns about the truce's fragility, saw minor gains at Friday's open.
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