Asia report: Most markets rise despite renewed Iran tensions

(Sharecast News) - Asia-Pacific markets mostly rose on Friday, with South Korea's Kospi hitting a fresh intraday record and Japan's Topix reaching a new all-time high, as investors looked past renewed military activity involving Iran and focused on gains in technology shares and record closes on Wall Street.

"Global equities are ending the week at fresh highs as the market embraces a tentative US-Iran ceasefire deal and another powerful leg higher in technology stocks," said Patrick Munnelly, market strategy partner at TickMill.

"The MSCI All Country World Index rose 0.4% to a record, while Asian equities surged 2% to an all-time peak, helped by renewed optimism that lower Middle East tensions will reduce the energy shock and support global growth."

Iran's armed forces reportedly fired missiles at unspecified targets late Thursday, according to state media outlet Fars, hours after the Pentagon said Tehran had fired a ballistic missile toward Kuwait and deployed attack drones in and around the Strait of Hormuz.

Earlier in the day, a White House official confirmed an Axios report saying the US and Iran had "mostly agreed" on the terms of a deal aimed at temporarily halting the three-month conflict.

Oil prices fell despite the Middle East tensions, with Brent crude futures last down 1.65% on ICE at $92.16 per barrel, and the NYMEX quote for West Texas Intermediate losing 1.77% to $87.33.

"Oil is driving the macro relief," Munnelly said.

"Brent fell ... after reports of a proposed 60-day ceasefire extension and continued negotiations over Iran's nuclear programme, pending President Trump's approval."

Munnelly said Brent was now down more than 18% this month, which would mark its biggest monthly decline since March 2020.

"That move is central to the equity rally because it eases the immediate inflation scare, improves the real-income outlook and lowers the risk that central banks are forced into further tightening," he said.

"But the deal is still tentative, and the market has already learned several times this month that the peace premium can reverse quickly."

Technology stocks also supported sentiment after a strong earnings outlook from Snowflake revived enthusiasm around the artificial intelligence trade.

Snowflake shares surged 36.5% overnight, their best day on record, after the cloud-based data platform provider beat top- and bottom-line expectations, issued strong second-quarter guidance and announced a plan to spend $6bn on Amazon Web Services over five years.

"Technology remains the other major support," Munnelly said.

"SpaceX has reportedly lifted its IPO valuation target to at least $1.8trn, while Dell surged nearly 40% after-hours on a stronger sales outlook.

"The AI infrastructure theme is still broadening beyond the most obvious semiconductor winners and into hardware, servers, data-centre supply chains and private-market valuations."

Tokyo bourse in the green on back of economic data dump

Japan's Nikkei 225 rose 2.53% to 66,329.50, while the broader Topix gained 1.41% to 3,957.17, a new all-time high.

Sumco Corporation jumped 19.3%, Ibiden rose 16.51%, and Taiyo Yuden added 13.87%.

Japan's consumer confidence index rose to 33.6 in May from 32.2 in April, beating forecasts for 32.0 and marking the highest reading since February.

Sentiment improved across all major categories, with overall livelihood rising to 30.2 from 28.2, income growth to 40.3 from 39.8, employment prospects to 38.3 from 37.4, and willingness to buy durable goods to 24.4 from 23.2.

Japan's unemployment rate fell to 2.5% in April from 2.7% in March, below expectations and the lowest level since July 2025.

The number of unemployed fell by 70,000 to an eight-month low of 1.79 million, while employment rose by 610,000 to a record 68.76 million.

The labour force increased by 53,000 to a record 70.55 million, and the number of people outside the labour force fell by 540,000 to a record low of 39.00 million.

The jobs-to-applicants ratio held steady at 1.18.

Japan's industrial production meanwhile rose 0.8% month on month in April, reversing a 0.4% fall in March and defying forecasts for a 0.9% decline.

Output rose 2.3% year-on-year, marking the fifth consecutive month of expansion.

Retail sales grew 2.1% year on year, ahead of expectations for 1.3% and the fastest increase since April 2025, while housing starts rose 11.4% year on year, returning to growth for the first time since last October but falling short of forecasts for a 15.5% rise.

Equities mixed in rest of region

In China, the Shanghai Composite fell 0.73% to 4,068.57, while the Shenzhen Component dropped 1.81% to 15,575.13.

Fujian Forecam Optics declined 15.47%, Beijing Worldia Diamond Tools lost 12.81%, and Xi'an Bright Laser Tech fell 10.54%.

Hong Kong's Hang Seng Index rose 0.7% to 25,182.39.

Lenovo Group surged 21.95%, Sunny Optical Technology Group gained 13.78%, and Innovent Biologics advanced 11.36%.

South Korea's Kospi 100 climbed 4.03% to 10,500.69 as the wider Kospi hit a fresh intraday record.

LG Electronics jumped 29.93%, LG Innotek rose 28.57%, and LG Corporation gained 26.6%.

Samsung Electronics added 5.84% after saying it had begun shipping samples of its latest high-bandwidth memory chip to customers globally.

Stocks rise in the antipodes

Turning down under, Australia's S&P/ASX 200 rose 1.62% to 8,731.70.

Judo Capital gained 12.23%, IperionX rose 9.59%, and Flight Centre added 8.22%.

Across the Tasman Sea, New Zealand's S&P/NZX 50 advanced 0.29% to 13,244.55.

Tourism Holdings surged 20.45%, KMD Brands rose 13.7%, and Serko gained 6.25%.

New Zealand's ANZ Business Outlook Index rebounded to 10.0 in May from -10.0 in April, although sentiment remained subdued compared with levels before the Middle East conflict.

Firms' own activity outlook rose to 25.6 from 19.6, export intentions improved to 11.5 from 1.1, profit expectations turned positive at 2.0 from -13.3, investment intentions rose to 5.8 from 3.3, and employment intentions increased to 3.4 from -2.7.

Pricing intentions and cost pressures were little changed, while inflation expectations eased to 3.63% from 3.81%.

Dollar mixed against its regional peers

In currencies, the dollar was last up 0.01% on the yen to trade at JPY 159.26 as it gained 0.14% against the Aussie to AUD 1.3981, while it fell 0.49% on the Kiwi to change hands at NZD 1.6768.

"The April PCE report was mildly better than expected, but not a true disinflationary breakthrough," Munnelly said.

"Headline PCE rose 0.40% month-on-month, below the 0.5% median forecast, lifting the annual rate to 3.77% from 3.53%.

"Core printed 0.24% m/m versus a 0.3% survey estimate, pushing the annual rate to 3.29% from 3.24%."

Munnelly said the more important part of the report was income and spending, with consumer spending rising another 0.5% month on month, confirming that household demand remained resilient.

"The problem is that incomes did not keep up," he said.

"Personal income was flat on the month, well below the 0.4% consensus, and the savings rate fell again to a very thin 2.3% from 2.6% of disposable income.

"Markets are celebrating the best possible combination - falling oil, tentative peace and accelerating AI capex," Munnelly added.

"That is a powerful mix for equities and explains the record highs.

"But the PCE details warn that the US consumer is leaning more on savings to maintain spending, while the labour market remains in a low-hire regime.

"If the ceasefire holds, the rally can extend. If it fails, the thin household buffer and still-high core inflation will matter quickly."

Reporting by Josh White for Sharecast.com.