Asia stocks surge, oil falls on hopes of US-Iran truce deal
Oil markets have whipsawed this week as investors parse the chances of a breakthrough between Washington and Tehran that could potentially resume normal shipping through the Strait of Hormuz.
Currency traders work near a screen showing the Korea Composite Stock Price Index (KOSPI), top center, and the foreign exchange rate between US dollar and South Korean won, top left, at the foreign exchange dealing room of the Hana Bank headquarters in Seoul, South Korea, Thursday, May 28, 2026. (Photo: AP/Ahn Young-joon)
HONG KONG Asian stock markets surged and oil prices receded on Friday (May 29), boosted by optimism that the United States and Iran will reach a deal to end their war that has hobbled global energy supplies.
Oil markets have whipsawed this week as investors parse the chances of a breakthrough agreement between Washington and Tehran that could potentially resume normal shipping through the crucial Strait of Hormuz.
Those hopes had been briefly dashed by new US military strikes on Iran Wednesday night, countered by Tehran’s Revolutionary Guard’s targeting of an American airbase in the region.
But by Thursday evening, negotiators had edged toward a deal to extend their fragile ceasefire for 60 days, though approval from President Donald Trump was still needed, US sources told AFP.
That news reversed a sluggish start for shares on Wall Street, with major indices closing higher on the day.
During Friday afternoon trading in Asia, the price of Brent crude was down by more than 1 per cent to US$92.54 a barrel, while primary US benchmark West Texas Intermediate dropped at a similar pace to US$87.56 a barrel.
Seoul led the charge in Asia, surging 3.6 per cent while Tokyo’s Nikkei closed at a record high.
Sydney, Taipei and Hong Kong also saw healthy gains, while Shanghai lost 0.7 per cent on the day.
Wall Street’s advances on Thursday came despite several gloomy indicators, with the Federal Reserve’s preferred inflation gauge rising in April to its highest since 2023 and first quarter economic growth being revised lower.
The combination of persistent inflation and slowing growth lowers the chances of interest rate cuts by the Fed, despite Trump’s repeated calls for lower rates to boost the economy.
Still, “recession risks are easing as oil prices moderate and the probability of worst-case scenarios fades”, wrote Matthew Martin of Oxford Economics.
“While reduced risks from the war have helped, the improvement in equity prices is mostly because of a robust earnings season. The driver is overwhelmingly AI-related capital expenditure,” he said.
Global AI bullishness has driven a historic rally, this week pushing the market capitalisations of chipmakers Micron and SK hynix across the US$1 trillion threshold.
In Europe, observers are awaiting a key gathering of leaders on Friday to discuss ways to address gaping trade deficits with China.
European Union commissioners will hold a debate on what the 27-nation bloc should do to defend the continent’s companies from what Brussels describes as unfair competition from Chinese rivals.
