(June 19): Stocks in Asia were poised to rise on Friday after a peace deal between the US and Iran boosted optimism that the reopening of the Strait of Hormuz will ease inflation pressures by restoring oil flows.
Equity-index futures for Japan and South Korea pointed to gains at the open, while contracts for Australia edged lower. US stock futures edged higher after the S&P 500 climbed 1.1% and the Nasdaq 100 gained 2.5% on Thursday. A gauge of semiconductor stocks rose to a record, led by Intel Corp, after President Donald Trump said the company would work with Apple Inc to design and manufacture semiconductors in the US.
West Texas Intermediate crude oil steadied in early trading on Friday after Trump signed an interim agreement to end the war with Iran and tankers began transiting the Strait of Hormuz. The yield on 10-year Treasuries were little changed at around 4.45% on Thursday, while the dollar gained 0.3%.
As the accord took effect, commercial shipping began returning to the strategic waterway after the US declared an end to its blockade, helping calm fears of a sustained shock to global energy supplies. Attention now shifts to talks over Tehran’s nuclear programme and the durability of the ceasefire, and whether lower oil prices and easing inflation pressures can be maintained.
“The progress toward releasing oil supply from the Persian Gulf has supported equity prices,” said Ian Lyngen at BMO Capital Markets. “Lower energy costs have also eased forward inflationary concerns and led to meaningful declines in longer-dated Treasury yields.”
Stocks in Asia were poised to rise on Friday after a peace deal between the US and Iran boosted optimism that the reopening of the Strait of Hormuz will ease inflation pressures by restoring oil flows.
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Should lower energy costs continue to filter through to inflation data, policymakers may ultimately find sufficient justification to keep rates unchanged for an extended period rather than hiking, according to Fawad Razaqzada at Forex.com.
“My view remains that inflation should moderate gradually over the coming months, and this might allow the Fed to maintain current policy settings rather than implement fresh tightening,” he said.
Meantime, the Bank of England held rates at 3.75%, saying the recent drop in oil prices was “encouraging”, even as two of the nine policymakers voted for an immediate quarter-point hike over concerns of persistent inflation.
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