Stocks advanced on Friday, with European markets on track for their third straight weekly gain and Asian peers notching their best week in more than three years after Israel said on Thursday it had sought talks with Lebanon, raising hopes for a break in Middle East hostilities and a reopening of the Strait of Hormuz.
Iran has cited Israel’s continuing attacks on Lebanon as a key sticking point in its ceasefire agreement with the U.S., which requires Iran to reopen the strait, through which a fifth of global energy supplies typically pass. Delegations from Tehran and Washington are set to hold talks in Pakistan on Saturday.
The pan-European index rose 0.6 per cent, with healthcare .SXDP and technology stocks led the way, rising 1.3 per cent and 0.8 per cent respectively.
Wall Street futures were mostly flat after reversing earlier losses. On Thursday, the S&P 500 rose 0.6 per cent, its seventh straight day of gains.
“For markets at least, the financial stress has continued to ease before the weekend talks,” Deutsche Bank analysts wrote. “Those hopes for a de-escalation in Lebanon helped ease concerns that the broader ceasefire could fall apart ahead of this weekend’s talks.”
Underscoring growing relief, a key index of equity options volatility has fallen back to pre-war levels, albeit the only major indicator to do so.
MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.9 per cent to put it up 7.3 per cent for the week, its biggest advance since November 2022.
“We believe this could be the beginning of the end” of the war, and that presents “an opportunity for investors to focus on pre-war trends and fundamentals,” said Rupal Agarwal, Asia quant strategist at Bernstein in Singapore.
Still, oil markets remained jittery, creeping up from this week’s one-month lows. Brent crude rose 1 per cent to $96.96 a barrel, though it was still on course for a fall of around 11 per cent this week, which would be its biggest weekly decline since June 2025.
The Strait of Hormuz remains largely closed to shipping, with marine traffic at well below 10 per cent of normal volumes on Thursday as Tehran asserted its control of the strategic waterway.
In a post on Truth Social, U.S. President Donald Trump warned Tehran not to charge tolls on ships crossing the Strait of Hormuz, saying Iran was doing a “very poor job” of allowing oil to pass through the strait. “That is not the agreement we have!” he wrote.
The U.S. dollar index, which measures the greenback’s strength against a basket of six currencies, was on track to lose 1.3 per cent this week, its worst weekly performance since January. It was last up 0.1 per cent at 98.93.
The euro fell 0.2 per cent to $1.167 but remained above its 200-day moving average. The currency pushed above that line for the first time in more than a month earlier this week, signalling that it is primed for further gains.
Investors were awaiting U.S. inflation data, due later in the day, for insights into how the Middle East conflict has affected the world’s biggest economy. Consumer prices likely recorded their biggest increase in nearly four years in March as the war with Iran boosted oil prices and the pass-through from tariffs persisted, which would further diminish hopes for an interest rate cut this year.
In an early sign that the Middle East conflict is feeding cost pressures into the world’s second-largest economy, China’s factory-gate prices rose for the first time in 3-1/2 years in March, official data showed.
In bond markets, German Bund yields, a benchmark for the euro zone, were on track for a weekly rise despite their sharpest drop in years on Wednesday. The yield on the U.S. 10-year Treasury bond was up 0.4 basis point at 4.295 per cent.
Reuters