Markets gain on easing Iran tensions as oil prices retreat

Market Commentary

Hopes for a diplomatic resolution to the Iran conflict supported global markets on Friday after Tehran indicated that Washington’s latest proposal had helped narrow differences between the two sides. While key sticking points remain — including US demands that Iran surrender its enriched uranium stockpile and halt uranium enrichment altogether — easing geopolitical tensions helped improve overall risk sentiment and reduced concerns around further disruption to oil supply.

Against this backdrop, US equities closed higher as softer oil-price concerns and renewed enthusiasm around quantum computing boosted investor appetite for risk assets. IBM rallied 12.40% after securing the largest portion of a new $2 billion US government funding package for the sector, while Nvidia slipped 1.80% despite strong earnings, with expectations remaining exceptionally elevated. In the retail space, Walmart traded weaker after disappointing guidance, although Ross Stores gained 5% in after-hours trade following stronger-than-expected sales and earnings.

European equities ended the session broadly unchanged, with investors balancing improving Middle East diplomacy against recent market gains and ongoing uncertainty around the oil outlook. Airbus declined 4.30%, weighing on German equities, while QinetiQ and Investec advanced after delivering earnings ahead of expectations. Naturgy climbed to its highest level since 2022 following analyst upgrades, while Turkish equities dropped 6%, triggering a market-wide circuit breaker.

Asian markets, meanwhile, adopted a firmer risk-on tone, following Wall Street’s gains and supported by optimism surrounding potential US-Iran negotiations. Japan led regional advances, with the Nikkei rising more than 2.50% on the back of technology strength and a sharp rally in SoftBank. The broader MSCI Asia-Pacific Index gained around 0.80%, while Hong Kong’s Hang Seng added approximately 1.20%, helped by Lenovo reaching a multi-decade high after strong AI-driven earnings. Korea’s Kospi also finished higher.

Despite the more constructive global backdrop, local markets closed lower on Friday, weighed down by continued pressure on global technology counters and broader international market strains. The FTSE/JSE All Share Index declined 0.73% to 113 215.96 points, while the Top 40 Index shed 0.85% to close at 105 378.37 points. The rand remained relatively stable, trading in a range of R16.39 to R16.65 against the US dollar.

Commodity markets also reflected the shifting geopolitical narrative. Oil prices fell sharply at the start of the week as prospects for a US-Iran agreement improved. According to MS Now, the proposed deal would reopen the Strait of Hormuz, end hostilities, unfreeze certain Iranian assets and pave the way for further negotiations aimed at limiting Tehran’s nuclear programme. However, President Donald Trump stated that Washington would maintain its blockade of the Strait until a formal agreement is reached and reiterated that the US would not “rush” into a deal. Brent crude declined 5% to below $99 a barrel, while WTI crude fell to around $92.

Gold prices remained above $4 500 per ounce, trading within a relatively narrow range after regaining support earlier in the week as easing oil prices reduced inflation concerns. Softer energy prices helped alleviate pressure on central banks to raise interest rates further and contributed to stabilisation along the long end of the yield curve, where an earlier rise in yields had pushed bullion to a three-week low.