World stocks edged higher on Friday while oil prices slid and headed for a weekly drop as traders awaited clarity on efforts to reopen the Strait of Hormuz and extend a US-Iran ceasefire. Sources said the United States and Iran had agreed to extend their ceasefire and lift shipping restrictions, though US President Donald Trump has yet to approve the deal and Iranian state media said it had not been finalised.
Oil futures fell around 2 per cent and were on track for their steepest weekly decline since early April. MSCI's world stocks index rose 0.4 per cent to a record high.
Gains were led by chipmakers, after upgraded forecasts from Dell boosted AI sentiment and lifted benchmarks in Tokyo and Seoul 2.5 per cent and 3.5 per cent, respectively.
"You're getting these multiple confirmation points and that's just going to extend the rally for anything AI-related", said Jason da Silva, director of global investment strategy at Arbuthnot Latham.
Gains elsewhere were more modest. Wall Street futures were broadly flat, while European stocks rose 0.5 per cent. The S&P 500 closed at a record 7,563.63 on Thursday.
The dollar was on track for a small weekly decline, reflecting lower US Treasury yields. Analysts, however, said the drop in yields may be limited, as a US-Iran deal is unlikely to quickly reverse inflation pressures from elevated fuel prices.
"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". Investors are also tracking other geopolitical risks.
Nato member Romania said on Friday a drone injured two people during an overnight Russian attack on neighbouring Ukraine — the first time in the war that a drone had hit a densely populated area in Romania and caused injuries.
Global bond yields are lower on the week, with the US 10-year Treasury yield at 4.4453 per cent. Inflation in the euro zone's four largest economies hovered above the European Central Bank's 2 per cent target for a third straight month in May, preliminary data showed on Friday, as a rise in fuel costs triggered by the Iran war began to feed through to other prices.
Overnight US data on consumption, income, home sales and GDP came in on the soft side of expectations, with inflation running hot but a little bit under forecasts.
In Japan, annual core inflation in Tokyo stayed below the central bank's 2 per cent target for a fourth straight month in May, though a rebound in factory activity pointed to resilience and supported the case for a June rate hike.
The yen remained under pressure after sliding back towards levels that previously prompted suspected intervention. At 159.275 per dollar, it was still just shy of the 160 level seen as a line in the sand for policymakers. Japanese authorities spent 11.7 trillion yen on currency intervention between April 28 and May 27, the Ministry of Finance said on Friday, a fraction of its $1 trillion war chest. The euro dipped 0.1 per cent to $1.164175.
The New Zealand dollar has been a major mover this week, rising about 2 per cent against the US currency after the Reserve Bank of New Zealand held rates steady on Wednesday but delivered a more-hawkish-than-expected outlook. — Reuters
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