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Asian stocks rise – Iran diplomacy in focus

Asia-Pacific equities advanced on Friday as investors weighed signs of progress in US-Iran diplomacy, while reports that Tehran wants to retain its enriched uranium stockpile suggested negotiations could still prove difficult. US stocks had closed higher on Thursday on hopes for a negotiated end to the conflict, while European shares were mixed after weak euro-area business activity data reinforced concerns about the region’s growth outlook. The US dollar was little changed overall, while gold was slightly lower around USD 4530 per ounce. US Treasury yields edged lower, with the 2-year yield below 4.1% and the 10-year yield under 4.6%.

  • Date
  • Author Shane Strowmatt, Senior Investment Writer
  • Reading time 5 minutes

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Asia-Pacific equity markets moved higher on Friday as investors assessed US-Iran diplomatic efforts, with Japan’s Nikkei 225 rising 2.8%, South Korea’s Kospi gaining 0.7%, Hong Kong’s Hang Seng advancing 1.3% and Australia’s S&P/ASX 200 adding 0.3%. Sentiment was supported by hopes for a peace deal in the Middle East, although reports that Iran wants to retain its enriched uranium stockpile suggested negotiations with Washington could remain difficult. Oil prices were little changed, with Brent crude oil trading around USD 105 and West Texas Intermediate (WTI) at USD 98 per barrel.

Japan inflation slows in April

Japan’s core inflation slowed to 1.4% in April, down from 1.8% in March and marking its lowest level since March 2022, according to data released on Thursday, while the reading also came in below market expectations. Headline inflation eased to 1.4% from 1.5%, and the Bank of Japan’s closely watched core-core measure fell to 1.9% from 2.4%, with government fuel and tuition subsidies helping to restrain price growth. Even so, concerns over energy costs remained in focus amid the Iran conflict. The figures came as Japan’s economy expanded an annualised 2.1% in the first quarter, supported partly by strong exports, which may keep the prospect of a Bank of Japan rate increase alive.

US stocks rise on Iran hopes

US equities recovered on Thursday as easing oil prices and growing hopes for a negotiated end to the Iran conflict supported sentiment, with the Dow Jones Industrial Average rising 0.6% to 50,285.66 points, the S&P 500 gaining 0.2% to 7445.72 points and the Nasdaq 100 adding 0.2% to 29,357.27 points. Optimism followed comments from US President Donald Trump that talks with Iran were in their final stage, while signals from Tehran and US Secretary of State Marco Rubio also suggested some progress towards a possible agreement. Among individual stocks, computer company IBM jumped 12.4% after securing multibillion-dollar US government support for quantum computing chip production, while music streaming group Spotify advanced 13% on concert-ticketing plans and sandal maker Birkenstock rose 19.5% on a USD 250 million buyback announcement. By contrast, chipmaker Nvidia fell 1.8% despite strong first-quarter results, retailer Walmart dropped 7.3% after its earnings update.

US business growth stays subdued

US business activity remained modest in May, with the S&P Global flash composite output index unchanged at 51.7, while the services activity gauge eased slightly to 50.9 from 51.0 and the manufacturing PMI rose to 55.3 from 54.5, according to data released on Thursday. The report said manufacturing was supported by precautionary stock building, helping factory output reach a 49-month high, while services demand stayed weak and export sales fell as the conflict in the Middle East, higher prices and uncertainty weighed on clients. S&P Global also said input cost inflation accelerated to its strongest pace since late 2022, driven by energy prices and supply disruption, prompting firms to raise selling prices at the fastest rate since August 2022. Employment fell for the second time in three months, with service-sector job cuts offsetting stronger factory hiring.

Euro-area downturn worsens in May

Euro-area business activity weakened further in May, with the flash composite PMI falling to 47.5 from 48.8 in April, as the services PMI dropped to 46.4 from 47.6 and the manufacturing PMI eased to 51.4 from 52.2, according to data released on Thursday. S&P Global said the deterioration reflected intensifying cost pressures linked to the conflict in the Middle East, with input prices rising at the fastest pace in three-and-a-half years and prices charged increasing at the quickest rate in 38 months. New orders, export demand, employment and business confidence all weakened further, while French firms reported a particularly sharp fall in output that added to the broader euro-area decline. The survey data were consistent with a 0.2% contraction in second-quarter euro-area GDP. European stock markets closed mixed on Thursday, with the broader regional tone remaining slightly negative. The Euro Stoxx 50 fell 0.2%, while Germany’s DAX lost 0.5% and France’s CAC 40 slipped 0.4%. Switzerland’s Swiss Market Index bucked the trend and rose 0.4% on Thursday.

Corporate and economic calendar

Corporate news in focus: FY 2026 figures from Richemont.

Economic data in focus: German gross domestic product (08:00), Germany’s GfK Consumer Climate (08:00), UK retail sales (08:00), Germany’s ifo Business Climate Index (10:00), European Central Bank President Christine Lagarde speaks (10:30), Canadian retail sales (14:30), University of Michigan Consumer Sentiment Index (16:00).

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Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.