Asian Stocks Surge as Oil Prices Fall and Strong US Dollar Weighs on Markets

Asian stock markets rallied on Friday, with Japan and South Korea reaching record highs as easing tensions in the Middle East and the reopening of the Strait of Hormuz pushed oil prices lower, reducing global inflation concerns and boosting investor sentiment.

Japan’s Nikkei index climbed 0.8%, marking its fifth consecutive record close and extending its weekly gain to 8.5%. South Korea’s benchmark index jumped 3.1%, bringing its impressive weekly advance to 15.3%. Trading volumes across Asia were lighter as markets in mainland China, Hong Kong, and Taiwan remained closed for holidays.

Oil markets continued to retreat after the United States lifted its blockade on Iran, allowing tankers to resume passage through the Strait of Hormuz under an interim peace agreement that ended a three-month regional conflict. Brent crude futures fell 1% to $79.03 per barrel and were down 9.5% for the week, easing fears of energy-driven inflation.

Despite the improved outlook, analysts warned that Iran is unlikely to surrender influence over the strategically important waterway. Some experts suggested that future governance arrangements involving Iran and Oman could lead to maritime transit fees, potentially creating long-term uncertainty for global shipping routes.

Meanwhile, the U.S. dollar strengthened significantly following a more hawkish stance from the Federal Reserve. Markets are now pricing in the possibility of additional interest rate hikes this year, pushing the U.S. Dollar Index to 100.78 and driving the Japanese yen to 161.26 per dollar, its weakest level since July 2024. The move has intensified speculation that Japanese authorities could intervene to support the currency.

The British pound slipped to $1.3195 after the Bank of England kept interest rates unchanged. Precious metals also came under pressure from the stronger dollar, with gold falling 0.5% to $4,188 per ounce and silver dropping 0.8% to $65.30.

In the United States, Wall Street futures edged lower after recent gains. Intel shares surged 10% to a record high after President Donald Trump announced that Apple would collaborate with the chipmaker to design and manufacture semiconductors domestically.

U.S. Treasury markets reflected shifting expectations for monetary policy. Two-year Treasury yields rose as investors anticipated tighter policy, while longer-term yields declined amid confidence that lower oil prices and the Federal Reserve’s commitment to controlling inflation would support economic stability.