Oil higher on Mideast hostilities; AI drives Asian stocks to sparkling weekly gains
Oil prices were higher on Friday and stocks a little bit lower as the U.S. and Iran exchanged fire in the Middle East, though many markets in Asia were still heading for stellar weekly gains as AI demand has swept up chipmakers.
Benchmark Brent crude futures were up 1.3% at $101.60 a barrel and European stock futures fell 0.7%.
The United States and Iran exchanged fire on Thursday in the most serious test yet of their month-long ceasefire, but Iran said the situation had returned to normal while the U.S. said it did not want to escalate. President Donald Trump said the ceasefire, which has more or less held for a month, was still in effect, sustaining hopes for a negotiated resolution.
Stock markets in Asia, which have been soaring thanks to gains in chipmakers and other AI-linked stocks, slipped only slightly from record highs.
MSCI's broadest index of Asian shares outside Japan fell 0.8%, as did South Korea's KOSPI though the latter was still headed for a weekly gain of more than 12% - the largest since 2008 - as Samsung and SK Hynix have surged.
Taiwan's benchmark is up 6.9% this week and Japan's Nikkei 4.5%.
"Despite ongoing hostilities and still-elevated oil prices, markets are pricing a limited duration," said Marija Veitmane, head of equity research at State Street Markets, with Asia and the U.S. attracting the most buying at Europe's expense.
The Nikkei was 0.4% lower through Friday morning, dragged by a fall in SoftBank shares after Arm Holdings, where it is majority owner, warned of trouble securing supply for its new artificial intelligence chip.[.T]
S&P 500 futures rose 0.2%.[.N]
Currency markets were broadly steady with the dollar recovering from recent lows and the yen in focus as Japan has likely been intervening to stave off further falls. [FRX/]
The euro bought $1.1731, the Aussie $0.7210 and the yen was at 156.9 per dollar having struggled to sustain gains beyond 155 after surges on suspected intervention to the tune of nearly $70 billion since last Thursday.
China's yuan, Asia's best-performing currency since the war broke out, is on the cusp of strengthening past 6.8 to the dollar and sits near its strongest since 2023.
U.S. JOBS AND UK ELECTIONS IN FOCUS
Investors are awaiting the U.S. non-farm payrolls report on Friday, with jobs expected to have increased in April by 62,000 after rebounding 178,000 in March, a Reuters survey of economists shows.
Local government elections across Britain are also in the frame. Poor results for the ruling Labour Party are expected and if that puts Prime Minister Keir Starmer's leadership in doubt, investors worry that the gilt market could be under pressure.
"Gilts are already under scrutiny due to inflation risks, and adding political uncertainty to the mix could further push (global) investors to look elsewhere," said ING analysts.
Sterling was last steady around $1.36.[GBP/]
A U.S. trade court ruled Trump's latest 10% temporary global duties are unjustified under a 1970s trade law. But analysts expect a swift appeal and little overall impact to U.S. levies.
Treasury yields had tracked crude prices higher through Thursday as traders worried about inflation, but did not move much more on Friday with the benchmark 10-year yield at 4.39%.
Australian 10-year yields jumped six basis points to 4.99%. Bitcoin was drifting towards a sixth weekly gain in a row at $79,460.
