Asian shares hit record highs as markets watch US–Iran tensions

Tokyo: Asian shares climbed to record highs while oil prices remained elevated on Wednesday, as markets looked for signals that a fragile truce between the United States and Iran will be extended. The dollar held gains from the previous session after Iran said the US had violated a ceasefire. New Zealand’s dollar rose after the central bank kept its policy rate unchanged but signalled that future rate increases may come sooner. Japanese and South Korean shares reached fresh peaks after major US stock markets reopened from a holiday and rose to all-time highs on optimism about artificial intelligence. Sentiment remains fragile, however, as talks continue to secure a lasting end to the three-month conflict that has unsettled energy markets. Central bank commentary will also be closely watched for indications of how the crisis could affect inflation and interest rate outlooks. “The markets are just waiting for something tangible now when it comes to a deal between the US and Iran,” said Kyle Rodda, senior financial market analyst at Capital.com. “A lot of good news is already priced in, leaving room for disappointment if a comprehensive agreement is not reached.” MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.6% for a fifth consecutive session, hitting an all-time high. Japan’s Nikkei gained 0.5%, briefly trading above the 66,000 mark for the first time. South Korea’s KOSPI surged 3.41%, extending gains after Samsung Electronics’ unionised workers approved a wage agreement, avoiding a strike that could have disrupted global chip supply chains. Euro, currency In early trade, Euro Stoxx 50 futures rose 0.23%, German DAX futures increased 0.24%, while FTSE futures slipped 0.18%. US S&P 500 futures edged up 0.06%. In currency markets, the dollar index was steady at 99.07 after rising 0.15% in the previous session. The euro increased 0.12% to $1.1642, while the yen held firm at 159.25. US crude oil fell 1.97% to $92.04 per barrel, while Brent crude declined 1.52% to $98.07, following a nearly 4% surge in the previous session. The Reserve Bank of New Zealand held interest rates at 2.25% in a split decision, signalling that increases may be required sooner. The New Zealand dollar rose 0.7% to $0.5878. In Australia, consumer price data showed a smaller-than-expected rise in April, while core inflation increased slightly. The Australian dollar slipped 0.1% to $0.7161. At a meeting in Tokyo, Bank of Japan Governor Kazuo Ueda warned that temporary energy shocks could become persistent if they affect wages and pricing behaviour. European Central Bank board member Isabel Schnabel also signalled support for a rate increase in June, even if a US–Iran peace agreement is reached. The yield on benchmark US 10-year Treasury notes fell 1.8 basis points to 4.473%, marking a third consecutive daily decline to its lowest level since May 14. Markets are awaiting Thursday’s release of the personal consumption expenditures (PCE) index, the Federal Reserve’s preferred inflation measure. “With the PCE data due and geopolitical tensions still simmering around the Strait of Hormuz, this week could be pivotal for rate expectations, the dollar, oil and gold,” said Lukman Otunuga, head of market research at FXTM. Spot gold rose 0.1% to $4,510.82 an ounce, while copper gained 0.55% to $13,699.00 per tonne. In cryptocurrencies, bitcoin fell 0.40% to $75,711.92, while ether declined 0.26% to $2,070.46.