Asian stock markets climbed Friday as investors welcomed signs that a potential ceasefire extension between the U.S. and Iran could ease pressure on oil prices that have squeezed consumers and businesses for months. Japan's Nikkei 225 surged 1.8% to 65,814.96 after data showed May core inflation in Tokyo rose more slowly than expected, while Australia's ASX 200 rose about 1%.
The rally came as the U.S. and Iran were reportedly working toward a deal to extend a ceasefire, offering relief from a conflict that has stifled the flow of oil shipments through the Strait of Hormuz, through which roughly a fifth of the world's oil and natural gas is shipped. The war has pushed up gasoline prices and a wide range of goods, feeding inflation and squeezing consumers and businesses who were already facing rising prices from the ongoing impact of tariffs.
Oil Prices Retreat But Remain Elevated
Brent crude for August delivery fell 1.7% to settle at $91.12 per barrel, while benchmark U.S. crude oil for July delivery fell 1.7% to settle at $87.36. However, Brent remained well above the $70 per barrel level in late February before the war began, underscoring how geopolitical conflict continues to impose costs on households and the broader economy.
Wall Street also gained ground, with the S&P 500 rising 0.2% to 7,580.06, the Dow Jones Industrial Average gaining 0.7% to 51,032.46 and the Nasdaq composite adding 0.2% to 26,972.62. The S&P 500 set an all-time high for the fourth day in a row, notched its seventh consecutive gain and its ninth straight winning week, the longest such streak since 2023. In May, the S&P 500 rose 5.1% and was up 10.7% for the year.
Tech Rally Drives Gains Amid Inflation Concerns
Microsoft rose 5.4% and Broadcom gained 4.7%. Dell Technologies surged 32.8% after delivering profits that beat expectations and raising its outlook, citing strong demand for AI computing. Among other decliners, Paramount Skydance fell 1.9%, Amazon.com dropped 1.2% and Costco Wholesale closed 3.9% lower.
Angelo Kourkafas, senior global strategist at Edward Jones, wrote in a research note, "The rally has been largely tech-led and supported by resilient earnings, but the key question is whether it can be sustained."
Inflation Pressures Mount as Fed Holds Steady
Several reports this week showed inflation's rise and its impact on consumers. A measure of inflation preferred by the Federal Reserve accelerated in April to its highest level in three years, and consumer confidence is slipping amid the squeeze from rising inflation. The conflict has compounded price pressures that were already rising before the war began because of the ongoing impact of tariffs.
The Federal Reserve has been holding its benchmark interest rate steady as it watches inflation and is expected to continue holding rates steady at its next meeting in June and through the year, according to CME's FedWatch tool. Cutting rates could lower borrowing costs and help the economy, but it could also worsen inflation. Treasury yields held relatively steady, with the 10-year Treasury slipping to 4.44% from 4.45% late Thursday.
Companies in the S&P 500 have reported profit growth of 28% overall for the most recent quarter, according to FactSet, and the overwhelming majority have already reported their latest results. Markets in Europe and Asia mostly rose.
Why This Matters:
The potential easing of the Iran conflict offers critical relief for consumers and working families who have borne the brunt of elevated energy costs and broader inflation. The war's disruption of oil flows through the Strait of Hormuz has imposed real costs on households through higher gasoline prices and increased costs for everyday goods, compounding the burden of tariff-driven price increases. While corporate profits have surged 28% and stock markets have reached record highs, consumer confidence is slipping under the weight of inflation that has reached its highest level in three years. The Federal Reserve's decision to hold rates steady reflects the difficult balance between supporting economic growth and containing price pressures, but it also means borrowing costs remain elevated for families and businesses. Any diplomatic progress toward a sustainable ceasefire could provide meaningful economic relief while reducing the human toll of conflict.