Global Markets Rally as Middle East Peace Hopes Boost Risk Appetite
Asian markets extended a global rally on Friday as investors welcomed signs that a potential peace agreement between the United States and Iran could be within reach, easing geopolitical tensions and reducing concerns over energy-driven inflation.
Investor sentiment improved after US President Donald Trump suggested that a deal could be signed as early as this weekend, stating that negotiations had reached the highest levels of Iran’s leadership and had gained support from regional powers. While Iran later indicated that no final decision had yet been made, markets reacted positively to the prospect of de-escalation.
Oil prices fell sharply as traders priced in the possibility of reduced supply risks. Brent crude dropped 1.8% to $88.76 per barrel after declining almost 3% in the previous session, reaching its lowest level in two months.
The softer oil outlook helped drive gains across equity markets. MSCI’s broad Asia-Pacific index excluding Japan rose 3.7%, led by a 7.8% surge in South Korea’s Kospi. Japan’s Nikkei advanced 3.6%, while China’s CSI 300 gained 1.5% and Hong Kong’s Hang Seng climbed 2%.
The positive mood followed a strong session on Wall Street, where the Dow Jones Industrial Average rose 1.8%, the S&P 500 gained 1.7% and the Nasdaq Composite added 2.5% after Trump called off planned military strikes against Iran and indicated a diplomatic breakthrough could be imminent.
Meanwhile, investors are awaiting the highly anticipated market debut of SpaceX. The aerospace giant raised a record $75 billion through its initial public offering, securing a valuation of $1.77 trillion and marking one of the largest public listings ever seen.
The combination of easing geopolitical tensions, lower oil prices and reduced inflation concerns has provided a significant boost to global risk assets, with markets increasingly betting on a more stable economic backdrop heading into the second half of the year.
