Japan, South Korea markets hit records on hopes for a winding down of the Iran war

HONG KONG — Markets in Asia rose on Friday, with those in Japan and South Korea hitting fresh high, as traders bet the U.S. and Iran will agree to prolong the ceasefire in their battle by 60 days.

Oil prices dropped but remain above pre-war levels as the Strait of Hormuz remains largely closed. Analysts cautioned that prospects for a truce extension should be viewed with care as it will take time for oil supplies to restore.

U.S. futures nudged higher.

Tokyo’s Nikkei 225 surged 2.5% to a new high close of 66,329.50, after data on Friday revealed Tokyo’s core inflation rate for May was below expectations of economists.

South Korea’s Kospi climbed 3.6% to 8,476.15, also closing at an all-time high, driven by technology companies, buoyed by the global rise in artificial intelligence. Shares at Samsung Electronics, the country’s biggest company, climbed 5.8%.

Hong Kong’s Hang Seng rose 0.9% to 25,222.38 and the Shanghai Composite index declined 0.9% to 4,063.56.

Australia’s S&P/ASX 200 rose 1.6% to 8,731.70.

Taiwan’s Taiex gained 2.5% India’s Sensex dropped 0.2%.

Negotiators from the U.S. and Iran agreed Thursday to prolong their ceasefire and organize a new round of discussions on Iran's nuclear program, a U.S. official said. Iran has not formally announced the accord and the tentative agreement awaits the nod of U.S. President Donald Trump.

International benchmark Brent crude fell 1.2% to $91.57 a barrel in early trade on Friday. It was trading at roughly $70 a barrel at the end of February, before the war started. U.S. benchmark crude fell 1.5 percent to $87.56 a barrel.

Investors are looking for the reopening of the Strait of Hormuz. The U.S. official said the provisional agreement made clear that Iran wouldn’t be able to levy tolls on ships traversing the strait, while the U.S. would progressively reduce its sea blockade on Iranian ports.

“The oil market continues to drift lower as optimism builds that the U.S. and Iran are edging closer to a deal,” ING commodities strategists Warren Patterson and Ewa Manthey said Friday. “That would provide the oil market some immediate relief with tankers leaving the Persian Gulf if the strait is reopened. But the recovery is still uncertain.”

Ship owners may be reluctant to deploy vessels into the Persian Gulf, at least initially, because of fears that the ceasefire could collapse, they said. A recovery in oil and gas production would likewise probably be slow rather than quick.

Wall Street surged to fresh records Thursday with the benchmark S&P 500 reaching another all-time high, rising 0.6 per cent to 7,563.63. The Dow Jones Industrial Average was up less than 0.1% at 50,668.97 while the tech-heavy Nasdaq composite climbed 0.9% to 26,917.47.

Shares of discount retail operator Dollar Tree rose 17.9% after it announced better-than-expected profit. Department store retailer Kohl’s gained 20.6%, also after better-than-expected earnings.

Elsewhere, the U.S. dollar was flat at 159.24 Japanese yen in early Friday trading. The euro was unchanged at $1.1651.