Stock markets rallied and oil tumbled Friday on hopes that a deal to end the Middle East war could be imminent.
US president Donald Trump claimed an agreement could be signed in days as he cancelled threatened strikes on Thursday, although Iran’s position remained unclear.
Iran’s foreign ministry spokesman Esmaeil Baqaei said Tehran ‘had not reached a final conclusion on the agreement’.
The country’s state media said that under a draft agreement with the United States, Tehran would not give up control over the strategic Strait of Hormuz.
In Europe, Paris and Frankfurt stock markets rose more than 1.5 per cent, while London was one per cent higher, following big gains in Asia.
‘Investors were in a buoyant mood as hopes of a peace deal between the US and Iran were revived, having seemingly dropped off the table earlier in the week,’ said Dan Coatsworth, head of markets at AJ Bell.
‘Whether momentum can be sustained depends on positive noises about a resolution translating into something more solid in the coming days,’ he added.
World oil prices tumbled, with international benchmark Brent crude down more than three per cent at $87 a barrel.
‘Oil markets may be breathing a little easier, but the path back to smoother flows could take us into the latter part of the year,’ said Matt Britzman, senior equity analyst at Hargreaves Lansdown.
‘Even if a deal is reached, getting supply back to normal will not be as simple as flicking a switch, with mines in the Strait of Hormuz to clear, idled production fields to restart, and damaged energy infrastructure to repair,’ he said.
The mood on equity markets was also buoyant ahead of the market debut later Friday of Elon Musk’s SpaceX, the biggest initial public offering in history.
The $75-billion share sale puts SpaceX among Wall Street’s 10 biggest companies with a valuation of just under $1.8 trillion — ahead of Tesla, Facebook owner Meta, and Walmart.
Japan’s Nikkei on Friday closed up almost three per cent while Seoul’s chip-heavy Kospi gave back earlier gains to end the day more than four per cent higher.
The Hang Seng and Shanghai also rallied.
The European Central Bank raised interest rates on Thursday for the first time since 2023, after the Iran war sent oil and gas prices soaring.
Investors expect the Federal Reserve to also increase US interest rates this year.
The Bank of Japan and the Bank of England meet next week.
