GLOBAL MARKETS: Stocks extend rally on Gulf breakthrough hopes, oil near two-month lows

Asian stocks rallied on Friday, tracking a global surge in sentiment driven by hopes that a Middle East peace agreement may soon be reached. The upbeat mood pushed the U.S. dollar and bond yields lower, while oil prices dropped to two-month lows, easing inflation concerns.

Investor attention also turned to the highly anticipated market debut of SpaceX, which has made history with what is now considered the largest initial public offering on record. The company raised $75 billion in its IPO, giving it a valuation of $1.77 trillion and positioning it among the most valuable firms in the world.

U.S. President Donald Trump said on Thursday that a peace agreement could be signed as early as this weekend, following earlier threats of additional strikes on Iran. He added that negotiations with Tehran had advanced to the highest levels of Iran’s leadership and had gained support from a broad coalition of regional powers.

Despite repeated optimistic signals from Trump in recent weeks that have yet to produce a deal, markets have remained cautious.

“Nonetheless, this does look perhaps a bit more tangible than we have had,” said Ray Attrill, head of FX strategy at National Australia Bank.

“If we hear something from Iran that sounds positive, the odds of a peace deal are clearly going to flip quite dramatically.”

A confirmed agreement would mark a significant diplomatic breakthrough, potentially ending a three-month conflict that has driven global energy prices sharply higher. The European Central Bank raised interest rates for the first time in nearly three years on Thursday, aiming to contain war-driven inflation pressures.

Oil markets reacted sharply to the possibility of a deal. Brent and U.S. West Texas Intermediate crude both fell to their lowest levels in two months before trimming some losses. WTI crude futures were last down 1.2% at $86.69 per barrel, while Brent declined 1.1% to $89.40.

In equities, MSCI’s broad index of Asia-Pacific shares outside Japan jumped 3.2%, led by a 7.4% surge in South Korea’s KOSPI. Japan’s Nikkei rose 2.7%, while China’s CSI300 gained 1% and Hong Kong’s Hang Seng advanced 1.3%.

Overnight on Wall Street, major indexes posted their strongest daily gains since April 8, driven by renewed risk appetite and expectations surrounding SpaceX’s debut. The Nasdaq climbed 2.5%, supported by speculation of a strong first trading session for the company.

IG estimated that SpaceX’s market capitalization could exceed $2.4 trillion by the end of its first trading day, significantly above its IPO valuation. Analysts also suggested the stock could trade in the range of roughly $175 to $180 per share if momentum holds.

In U.S. bond markets, Treasuries held onto gains as expectations for further Federal Reserve rate hikes eased. Pricing for an October hike fell to 36%, down from 51% previously.

Two-year Treasury yields were steady at 4.074%, while benchmark 10-year yields held at 4.4710%, following sharp declines in the prior session.

The U.S. dollar stabilized after earlier losses, rising 0.2% to 160.20 yen. Traders remained alert for possible intervention from Japanese authorities as the yen hovered near levels widely seen as a potential trigger zone.

Commodity currencies weakened, with the Australian and New Zealand dollars both down about 0.3% against the greenback after earlier gains.

Precious metals also softened. Spot gold fell 0.6% to $4,189 per ounce, while silver declined 0.6% to $66.93 per ounce, giving back part of the previous session’s strong gains. -Reporting by Stella Qiu; Editing by Shri Navaratnam and Kevin Buckland/Reuters