Oil slide lifts Asia stocks as Nikkei and Kospi set records

Asian equities rose after the Strait of Hormuz reopened and Brent crude fell, sending Japan’s Nikkei and South Korea’s Kospi to fresh records and lifting regional markets.

Tanker traffic resumed after the United States lifted a blockade on Iran and an interim agreement took effect, removing the immediate threat of a prolonged supply squeeze through the Strait. Brent crude fell about 1% to $79.03 a barrel, taking its weekly decline to roughly 9.5%.

Japan’s Nikkei gained 0.8% and reached a record for the fifth straight session, extending its weekly advance to about 8.5%. South Korea’s Kospi climbed 3.1%, bringing its weekly rise to roughly 15.3%. Gains were concentrated in exporters, semiconductor firms and companies linked to artificial intelligence. Trading volumes were lighter because markets in China, Hong Kong and Taiwan were closed for holidays.

The interim agreement guarantees toll-free passage for 60 days. Analysts noted longer-term governance of the waterway is unresolved and flagged a possible shift toward oversight shared by Iran and Oman. They warned such an arrangement could open the door to a maritime service fee, which would add costs and uncertainty for shipping and energy markets. Before the conflict, about one-fifth of global oil and liquefied natural gas flows passed through the Strait.

Currency markets reflected a different dynamic. The dollar hovered near a 13-month high, with the dollar index around 100.78 and set for about a 1% weekly gain after a number of Federal Reserve officials signalled higher interest rates this year. The yen weakened past the 160-per-dollar mark to about 161.26, a level that market participants say may test Tokyo’s tolerance for further depreciation.

US Treasury yields shifted: two-year yields rose this week while 10-year and 30-year yields fell, leaving the yield curve flatter. “The curve remained notably flatter than before the meeting,” Molly Nickolin, Morgan Stanley strategist, observed, linking the change to higher expected policy rates and firmer confidence in the Fed’s credibility.

The stronger dollar weighed on metals. Spot gold fell about 0.5% to near $4,188 an ounce and silver slipped roughly 0.8% to $65.30. Futures for US stocks eased about 0.2% after the overnight gains, with some investors taking profits ahead of the US Juneteenth holiday.

Market participants said the current relief in oil markets depends on continued unhindered passage through the Strait. A steady restart of flows is expected to keep crude under pressure, while any dispute over fees or governance could quickly add a risk premium to oil prices and affect global shipping costs.