Asian stocks edged lower on Friday, pausing after a strong rally this month, as investors dialled back risk ahead of a crucial weekend that could shape the trajectory of the Middle East conflict.MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 0.8%, though it remained near its highest level since early March. The index is still up 14.5% in April after a sharp fall last month, reflecting strong recovery sentiment.Japan’s Nikkei fell about 1% after hitting a record high a day earlier, while other regional markets also traded in the red. Hong Kong’s Hang Seng dropped 1%, South Korea’s Kospi fell 0.6%, and Australia’s S&P/ASX 200 lost 0.3%.
Ceasefire hopes, oil below $100 support sentiment
Investor sentiment has been supported by signs of easing tensions, including a 10-day ceasefire between Israel and Lebanon that took effect Thursday. US President Donald Trump also indicated that talks with Iran could resume over the weekend, raising hopes of a broader resolution.Oil prices remained below the $100 mark, with Brent crude falling over 1% to around $98 per barrel and WTI dropping about 1.6%, as per Reuters. Despite the decline, prices are still elevated due to ongoing disruptions, particularly the closure of the Strait of Hormuz.
Profit booking, caution creep in
Despite recent gains, investors showed signs of caution, with many locking in profits after the recent surge. Analysts noted a disconnect between market optimism and underlying risks.“There’s quite a strong contrast between what policymakers and central bankers are saying about the risks… versus what the market is implying,” said Andrew Chorlton of M&G, as quoted by Reuters, adding that the market reaction appears “somewhat complacent.”Nick Twidale of ATFX Global also warned that sustained gains depend on tangible progress. “We need to see some concrete evidence that peace is going to last,” he said, noting that reopening the Strait of Hormuz would be key.
Global cues mixed despite Wall Street highs
Asian markets tracked mixed global cues after Wall Street notched fresh record highs, with the S&P 500 and Nasdaq extending gains for a second straight session.Currency markets remained relatively stable, with the euro near a seven-week high at around $1.17, while the dollar index hovered near its lowest levels since early March.Meanwhile, the International Monetary Fund has warned that prolonged disruption from the conflict could push the global economy toward recession, underlining the high stakes tied to upcoming diplomatic developments
