Oil prices slumped to two-month lows on the news of an agreement. US West Texas Intermediate (WTI) crude futures fell 1.9 per cent to US$86.08 a barrel, on top of a 2.6 per cent drop overnight. Brent dropped 1.5 per cent at US$89.08 per barrel, having fallen nearly 3 per cent overnight.
Japan’s Nikkei rose 4.3 per cent, while Australia’s resources-heavy shares climbed 1.8 per cent. South Korea’s KOSPI surged 8.3 per cent.
Overnight, Wall Street rallied with the three major indexes registering their biggest daily gains since Apr 8, when the US and Iran agreed to a temporary ceasefire. The Nasdaq jumped 2.5 per cent, helped by expectations of a strong market debut of Musk’s SpaceX.
Data showed that US producer prices increased more than expected in May, leading to the largest annual gain in three and a half years as the Middle East conflict drove up energy prices. On the labour market front, the number of Americans filing claims for unemployment benefits increased marginally last week, pointing to continued labour market resilience in early June.
Treasuries gained as hopes of a peace deal in the Gulf led markets to trim bets of a rate hike from the Federal Reserve this year. Pricing for a hike in October has come back to 36 per cent from 51 per cent.
Two-year Treasury yields were steady at 4.066 per cent on Friday, having slumped 6 basis points overnight. The benchmark 10-year Treasury yields held at 4.4631 per cent, after falling almost 8 basis points overnight.
The dollar nursed losses on lower yields. The dollar index, which measures the greenback against its major peers, held at 99.78, having lost 0.4 per cent overnight.
It edged up 0.1 per cent to 160.19 yen, after retreating 0.4 per cent on the prior session. Traders are still on high alert for any intervention from Japanese authorities as the yen stays below the critical 160 level.
Precious metals caught some relief from the lower dollar. Spot gold rose 0.2 per cent to US$4,222 an ounce, following a 3.5 per cent jump overnight, while spot silver rose 0.3 per cent to US$67.52 an ounce, after a 5.8 per cent gain.
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