Nikkei, KOSPI hit record highs as Iran deal fuels rally

The KOSPI opened above 9,200 Friday, extending its rally after first closing above 9,000 a day earlier, led by Samsung Electronics and foreign buying.ajupress
Japan’s Nikkei 225 capped its strongest week in nearly two years, buoyed by the U.S.-Iran deal that reopened the Strait of Hormuz and eased energy fears.apnews
A hawkish Fed and VP Vance’s suspension of follow-up Geneva talks tempered optimism, pushing the dollar index to a 13-month high.noortrends

Asian Stocks Hit Records as Iran Deal Eases Inflation Fears

Japan’s Nikkei 225 closed at a record high on Friday, capping its strongest weekly performance in nearly two years, while South Korea’s Kospi extended a historic rally past the 9,000-point mark as investors bet that the reopening of the Strait of Hormuz would cool global energy prices and ease inflationary pressures.

A Week of Records

The Nikkei first breached 69,000 on Monday before surpassing 70,000 on Tuesday, according to NHK, as semiconductor shares led gains fueled by optimism over the US-Iran interim agreement signed on Wednesday. The index set record closing highs in consecutive sessions throughout the week.apnews

In Seoul, the Kospi surged above 9,000 for the first time on Thursday, closing at 9,063.84 before opening even higher Friday at 9,292.71. The rally was driven by a global semiconductor boom, with Samsung Electronics the most-bought stock among foreign investors who purchased a net 1.01 trillion won of Korean shares on Thursday alone. Apple CEO Tim Cook’s comments about surging AI-driven chip demand further bolstered the memory-sector rally.ajupress

Oil Relief Meets a Hawkish Fed

The gains were underpinned by the US-Iran deal, which the Associated Press reported Wednesday includes an immediate ceasefire extension and the lifting of the US naval blockade of the Strait of Hormuz. PBS NewsHour reported that the US announced it was lifting the blockade to let ships pass through after sea traffic had been at a standstill since nearly the start of the war.nytimes

Yet the rally faced headwinds from a hawkish Federal Reserve. New Chair Kevin Warsh’s first meeting on Wednesday kept rates at 3.5%-3.75% but shifted the outlook sharply, with nine of 19 officials now projecting a rate hike this year and the median year-end projection rising to 3.8%. The US dollar index climbed to a 13-month high near 101.12 on Friday, on pace for a 1.2% weekly gain.reuters

Uncertainty Lingers

The durability of the market’s optimism was tested Friday after Vice President JD Vance suspended planned Geneva talks tied to the US-Iran agreement, raising doubts over its implementation. The Japanese yen slid to around 161 per dollar, its weakest since mid-2024, prompting warnings from Tokyo. Traders are now pricing a roughly one-in-three chance that the Fed could raise rates as soon as its July meeting.aljazeera