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Markets firm as investors eye Iran ceasefire and US inflation

Asian equities traded mostly higher on Friday, buoyed by hopes for a ceasefire between Iran and the US and supported by Wall Street’s gains, even as oil prices stayed elevated following attacks on Saudi energy infrastructure. In China, markets looked through mixed inflation data, where soft consumer prices underscored disinflationary pressures but producer prices returned to growth amid higher energy costs. US stocks finished in positive territory on Thursday on signs of de-escalation in the Middle East, while European indices ended lower, the US dollar and gold were broadly steady as investors awaited key US consumer inflation data later on Friday.

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

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Most major Asian equity markets advanced on Friday and were set for solid weekly gains, supported by optimism over potential ceasefire talks between Iran and the US and a positive lead from Wall Street’s seven-session rally. South Korea’s KOSPI outperformed, rising 1.6% on the day and heading for a nearly 10% weekly surge, helped by technology stocks and bargain hunting after sharp losses in March, while Japan’s Nikkei 225 climbed 1.9% and was on track for a 7% weekly advance. Australia’s S&P/ASX 200 was 0.3% lower, while India’s Nifty 50 was trading 1% higher on Friday. Regional sentiment was additionally supported by expectations for a ceasefire in the Iran conflict despite lingering doubts over the talks. Meanwhile, oil prices extended gains on Friday after Saudi Arabia reported a reduction in production capacity of about 600,000 barrels per day following attacks on its energy infrastructure, even though Brent crude remains down more than 11% for the week after the US and Iran announced a ceasefire on Tuesday.

China’s inflation data send mixed signals

Hong Kong’s Hang Seng Index was up 0.6% and mainland China’s CSI 300 was trading 1.6% higher following the release of mixed inflation data in the world’s second-largest economy. China’s consumer price index (CPI) increased 1% year-on-year in March, slowing from 1.3% in February and falling short of market expectations, according to data released on Friday. The weaker CPI figures highlight ongoing disinflationary pressures and subdued consumer spending despite policy support. In contrast, the producer price index rose 0.5% year-on-year in March after a 0.9% decline in February, beating forecasts and marking its first expansion since September 2022. The rebound in producer prices has been driven largely by higher global oil prices.

US stocks gain on Middle East easing

US equity markets closed higher on Thursday after early losses, supported by signs of de-escalation in the Middle East, with the Dow Jones Industrial Average rising 0.6%, the S&P 500 gaining 0.6% and the Nasdaq 100 advancing. Investor sentiment improved as US President Donald Trump said Israel would scale back strikes in Lebanon following talks with Prime Minister Benjamin Netanyahu, who later announced plans for direct negotiations with the neighbouring country.

US inflation remains elevated

Core personal consumption expenditures (PCE) inflation in the US increased 3% year-on-year in February, down slightly from January, while headline PCE inflation held at 2.8%, according to Commerce Department data released on Thursday. On the month, both core and headline prices rose 0.4%, as consumer spending advanced 0.5% and personal income unexpectedly slipped 0.1%, pointing to some pressure on household finances even before the Iran conflict pushed energy prices sharply higher. The same report showed fourth-quarter US gross domestic product was revised down to an annualised 0.5% from 0.7%, with weaker business investment dragging on growth and a key private domestic demand measure cut to 1.8%. Fed officials, who target 2% inflation and use PCE as their preferred gauge, remain cautious on interest rate moves as they weigh persistent above-target inflation, signs of softer growth and a labour market that still keeps unemployment steady despite a rise in weekly jobless claims to 219,000.

German industrial output edges lower in February

German industrial production fell 0.3% in February versus the previous month after seasonal and calendar adjustment, while output was unchanged compared with a year earlier, according to Destatis data released on Thursday. The decline was driven mainly by weaker construction activity and lower production of computers, electronics and pharmaceuticals, partly offset by a 1.7% rise in automotive output. In a separate release on Thursday, Destatis reported that German exports rose 3.6% month-on-month in February, resulting in a seasonally adjusted trade surplus of EUR 19.8 billion. European stock markets ended in negative territory on Thursday. The Euro Stoxx 50 slipped 0.3%, while Germany’s DAX lost 1.1% and France’s CAC 40 declined 0.2%. Switzerland’s SMI bucked the trend slightly, edging up 0.1%.

Corporate and economic calendar

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

Economic data in focus: German Consumer Price Index (08:00), SECO Swiss consumer sentiment (09:00), Italian manufacturing production (10:00), European Central Bank Vice President Luis de Guindos speaks (12:00), US Consumer Price Index (14:30), Canadian unemployment rate (14:30) and University of Michigan Consumer Sentiment Index (16:00).

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

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