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Global markets continued their strong upward trend after major US indices hit new historic highs, while risk appetite quickly spread to Asian markets, driven by a combination of technological momentum and a temporary easing of geopolitical concerns, despite lingering tensions in the background.
The three major U.S. indexes closed Thursday at new record highs, with the S&P 500 rising about 0.6%, the Nasdaq climbing 0.9% supported by technology stocks, while the Dow Jones managed to record limited gains that kept it in the green zone.
The main boost came after media reports indicated that US and Iranian negotiators had reached a 60-day timeframe aimed at extending the ceasefire and initiating discussions regarding Iran’s nuclear program. While the agreement does not represent a final settlement, markets interpreted it as a positive sign that reduces the likelihood of military escalation and alleviates potential pressure on inflation and energy prices.
Optimism increased after a White House official confirmed that the two sides had reached an agreement on most of the key issues, reinforcing investors’ belief that the diplomatic track was still viable and driving further flows into stocks, particularly in the technology sector, which continues to lead the upward trend.
But the geopolitical landscape was not without its complexities. Just hours after hopes for de-escalation had risen, Iranian media reported missile launches toward unspecified targets during the night, a development that served as a reminder of the rapid shifts in political and security dynamics in the region.
Nevertheless, markets appeared less sensitive to these developments compared to previous periods, as investors preferred to focus on declining volatility levels, lower oil prices, and continued strong momentum in technology stocks, indicating that traders now view geopolitical risks as challenges that can be contained as long as they do not turn into a widespread crisis.
This optimism quickly spread to Asia, where markets followed the US gains on Friday. South Korea’s Kospi index jumped more than 3%, hitting a new record high during the session before paring some of its gains, while Japan’s Topix index also reached an all-time high as investors flocked to technology stocks and companies involved in artificial intelligence and semiconductor spending.
Japan’s Nikkei 225 index also continued its strong performance, rising by about 2.5%, benefiting from the momentum that followed its surpassing the 65,000-point level earlier in the week, indicating that regional markets are still betting on the continuation of the technology spending cycle and global growth despite political and military tensions.
On a weekly basis, the Nasdaq continues to lead the US indices with gains exceeding 2%, while the S&P 500 rose by more than 1%, while the Nasdaq is heading towards recording a monthly rise of nearly 8% during May, in one of its strongest waves in recent times.
Despite these record gains, US stock futures showed some caution at the start of Friday’s session, moving near previous levels without a clear direction, reflecting investors’ anticipation of whether the current rally can maintain its momentum amid continued geopolitical volatility and questions about the path of inflation and interest rates.
