Asian stocks were steady and oil prices dipped on Thursday as investors assessed progress toward ending the war in the Middle East after the presidents of the US and Iran signed an interim peace deal.
Both countries released the text of the agreement, which had already circulated widely before its contents were published. It extends a ceasefire announced in April by another 60 days to allow the two sides to negotiate a final truce.
US president Donald Trump, however, threatened to resume attacks and kill Iranian officials if they failed to honour their commitments.
Oil prices fell, with US crude dipping 1.25 per cent to $75.83 a barrel and Brent crude down 1.4 per cent to $78.41 per barrel.
“Major geopolitical risk persists and will also remain a major driver of market action,” said Kyle Rodda, a senior financial market analyst at Capital.com.
MSCI’s broadest index of Asia-Pacific shares outside Japan was flat. Japan’s Nikkei share average rallied to another record high, surging past the 71,000 level for the first time, on solid gains in semiconductor and AI-related shares, while South Korean shares gained 0.9 per cent. US stock futures, the S&P 500 e-minis ESc1, were up 0.81 per cent at 7,484.8.
The benchmark 10-year Japanese government bond yield rose 2 basis points to 2.620 per cent, poised for its highest close since 16 June, after earlier touching 2.63 per cent.
Overnight on Wall Street, all three major indexes fell close to or more than one per cent as traders bet that the Federal Reserve’s next move would be a rate hike after new Fed chair Kevin Warsh highlighted the need to tame inflation and other policymakers projected rising interest rates later this year.
The Dow Jones Industrial Average fell 507.12 points, or 0.98 per cent, to 51,492.55, the S&P 500 fell 91.25 points, or 1.21 per cent, to 7,420.10 and the Nasdaq Composite fell 354.69 points, or 1.34 per cent, to 26,021.66.
The yield on benchmark 10-year Treasury notes rose to 4.471 per cent compared with its US close of 4.463 per cent on Wednesday. The 2-year yield, which rises with traders’ expectations of higher Fed funds rates, touched 4.1759 per cent compared with a US close of 4.163 per cent.
The Bank of England meets on Thursday and, as with the Fed, no change in rates is expected, leaving the focus on the tone of policymakers’ commentary.
The dollar rose 0.01 per cent against the yen to 160.65 after touching 160.79 overnight, hitting its highest level since July 2024.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.03 per cent to 100.32. The euro was up 0.1 per cent at $1.1511.
Recent declines in oil prices have begun to ease worries about an economic slowdown, especially in energy-importing Europe. The International Energy Agency said on Wednesday the oil market would move into a significant supply surplus in 2027 after recovering from the closure of the Strait of Hormuz.
