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Asia stocks retreat amid peace doubts - SNB and Bank of England keep rates unchanged

Equities in the Asia-Pacific region slipped on Friday as investors questioned the durability of the US-brokered agreement with Iran, while lower oil prices offered some support. On Wall Street, indices began to recover on Thursday as cyclical technology shares gained. Today, US markets remain closed for the Juneteenth holiday. In Europe, the Swiss and British central banks kept their monetary policy rates unchanged, as was expected by economists. The decisions followed a similar move by the Federal Reserve on Wednesday, while the ECB and the Bank of Japan tightened policy earlier this month. 

  • Date
  • Author Alessandro Fezzi, Content & Publications
  • Reading time 5 minutes

Strategist Middle East

Asia-Pacific stock markets traded mixed or partly lower on Friday as investors questioned if the signed "Memorandum of Understanding" between the US and Iran will last and technology shares lost momentum. Meanwhile, lower oil prices offered some support. Japan’s Nikkei 225 fell 0.6% after reaching a record high on Thursday, South Korea’s Kospi dropped 1.6% after crossing 9000 the previous day, and Australia’s S&P/ASX 200 lost 1.1%. In South Korea, Samsung Electronics fell 3%, while memory-chip maker SK Hynix rose 1% after earlier touching a record high on optimism about demand for artificial intelligence-related semiconductors. Markets also absorbed signs that crude prices were easing as shipping through the Strait of Hormuz resumed, with Brent crude down 0.5% and US West Texas Intermediate lower by 0.3% on Friday. In Japan, data showed core inflation held at 1.4% in May, unchanged from April and still below the Bank of Japan’s 2% target, partly because government subsidies continued to limit fuel and gas costs.

US stocks rebound led by tech shares and lower oil 

US equities recovered on Thursday as lower oil prices eased inflation concerns after the US and Iran signed a framework deal aimed at ending the war in the Middle East. The S&P 500 rose 1.1% to 7500.58 points, after the Dow Jones Industrial Average added 0.1% to 51,564.70 and the Nasdaq 100 jumped 2.5% to 30,406.19, led by technology shares. Markets also digested the Federal Reserve’s decision to leave interest rates unchanged on Wednesday, although expectations of higher inflation in 2026 have prompted investors to scale back hopes for rate cuts. Among individual stocks, Intel surged 10.6% on reports of a chipmaking agreement with Apple, while Accenture fell 18% after disappointing investors with its fourth-quarter revenue outlook.

SNB holds rates at zero and keeps franc in sight

The Swiss National Bank left its policy rate unchanged at 0% on Thursday and said it remained highly willing to intervene in foreign exchange markets to prevent a sharp rise in the Swiss franc, maintaining the stronger wording it adopted in March. Swiss inflation accelerated to 0.6% in May from 0.1% in February, largely because of higher oil product prices, while the central bank said underlying medium-term inflation pressure was little changed. The SNB now expects average inflation of 0.6% in both 2026 and 2027 and 0.7% in 2028, with the near-term outlook revised slightly higher due to rising raw material costs and firmer inflation abroad. It kept its Swiss growth forecasts at around 1% for 2026 and 1.5% for 2027, while warning that Middle East tensions, trade policy uncertainty and renewed upward pressure on the franc remain key risks.

BoE keeps rates unchanged

The Bank of England left its key interest rate unchanged at 3.75% on Thursday, in line with expectations, as it balanced still-elevated inflation against weak UK economic growth. UK inflation held at 2.8% in May after easing from 2.8% in April, while the economy contracted by 0.1% in April, underscoring the difficult policy backdrop. Higher energy costs linked to the Iran conflict have added to price pressures, with the UK seen as especially exposed because it is a net energy importer. 

German outlook improves slightly

Germany’s Ifo Institute raised its growth forecast for this year to 0.8% on Thursday from 0.6% in its spring escalation scenario, and said gross domestic product could expand by a further 0.8% in 2027. The institute said the outlook had improved because of hopes that the Iran conflict will ease and because of strong government spending. It nevertheless expects inflation to remain elevated at 2.9% this year and 2.7% next year as the effects of the energy price shock continue to weigh on the economy. The Ifo also warned that Germany’s longer-term outlook remains weak, with potential growth seen slowing to just 0.1% by the end of the decade.

Corporate and economic calendar

Corporate news in focus: There is no major corporate news scheduled today.

Economic data in focus: US and China holiday, Bank of Japan monetary policy meeting minutes (01:50), Japan Consumer Prices (01:50), Germany Producer Prices (08:00), UK retail sales (08:00), Canadian retail sales (14:30). 

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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.