Asian stocks surge on U.S.-Iran deal hopes as oil falls and tech rallies

The morning markets opened to a shift in the air. Donald Trump had signaled that the United States was close to a deal with Iran, and the world's traders moved on that signal like a school of fish turning in unison. Across Asia, the buying began. Japan's economic indicators climbed. Australia's followed. The MSCI Asia Pacific index rose two percent. In Seoul, the Kospi—a barometer for artificial intelligence investment—jumped seven percent. The movement was broad and it was real.

Wall Street had already shown the way. The S&P 500 had gained 1.8 percent on Thursday. The Nasdaq 100 had leaped 3.3 percent. The Philadelphia semiconductor index, a measure of the technology sector's health, had climbed nearly eight percent. SpaceX had just raised $75 billion in what became the largest initial public offering in history. The mood was one of relief and possibility: if the Middle East conflict could be contained through diplomacy rather than military action, the path forward for corporate earnings and artificial intelligence investment would clear.

The oil market responded first and most visibly. Brent crude fell 1.5 percent to around $89 a barrel. Trump had withdrawn his threat of military strikes against Iran, citing high-level conversations with Iranian leadership aimed at a negotiated end to the conflict. A deal could come as soon as this weekend in Europe, he said, with Vice President JD Vance in attendance. The prospect of avoided escalation meant the prospect of stable energy supplies, which meant lower prices and less pressure on central banks to keep interest rates elevated.

Treasury bonds rallied. Yields fell across all maturities—eight to eleven basis points lower—reaching the week's lowest levels. Gold extended its climb past $4,210 an ounce. The dollar appreciated slightly against its peers in the Group of Ten. The entire architecture of financial markets seemed to recalibrate around a single question: would the diplomacy hold?

Yet the uncertainty was real and acknowledged. Iranian state media reported Thursday morning that officials had not yet approved any final agreement text with the United States. The Iranian news agency Fars cited an unidentified source. Trump's reversal had come just hours after he had promised to strike Iran "very hard" and threatened to seize its oil infrastructure. Dave Mazza, chief executive of Roundhill Financial, captured the fragility of the moment: traders were enthusiastic about a canceled airstrike and now about a "big deal," he wrote, but no treaty had been signed. If an agreement materialized, the gains could be substantial—oil and volatility still reflected significant conflict risk. If it did not, today's gains would be borrowed money, and the market would reclaim them with interest.

The bond market's movement was complicated by fresh inflation data from the United States. Wholesale prices in May had risen more than economists had estimated. But core prices, excluding energy and food, had climbed less than expected. Tony Farren, head of sales and trading for interest rates at Mischler Financial Group, noted that many investors believed the worst of the inflation data was already known. The smaller-than-expected core increase, despite higher energy prices, had shifted the mood in the Treasury market, at least for now. Market participants began to price in the possibility that the Federal Reserve might not raise rates in December as previously expected, pushing that expectation into the first quarter of 2027.

The European Central Bank, meanwhile, had raised rates for the first time since 2023. Ulrike Hoffmann-Burchardi of UBS's chief investment office offered a measured view: the road to resolution would likely be uneven, but the base case was that diplomacy would ultimately prevail, allowing investors to refocus on resilient economic fundamentals and solid profit growth. The market had moved on hope. Whether that hope would be vindicated remained the only question that mattered.