Nikkei, Kospi scale records as cheaper oil lifts Asia market rally

Asian stocks advanced on Friday, with Japan and South Korea setting fresh records, as the reopening of the Strait of Hormuz pulled oil prices lower and gave investors a stronger disinflation story to trade.

The rally was not risk-free. The dollar hovered near a 13-month high after the Federal Reserve’s hawkish shift, pushing the yen to levels that may test Tokyo’s tolerance for further weakness.

With China, Hong Kong and Taiwan shut for holidays, trading was thinner than usual, but the week still ended with a clear message: cheaper crude is helping equities, while higher US rate expectations are reshaping currencies.

Oil relief fuels Asia’s record run

The biggest support for regional stocks came from energy. Tankers began moving through the Strait of Hormuz after the US lifted its blockade on Iran and an interim peace agreement took effect.

Brent crude fell 1% to $79.03 a barrel, taking its weekly decline to 9.5%.

That eased fears of another inflation shock for energy-importing economies.

Japan’s Nikkei rose 0.8% and touched a record for a fifth straight session, extending its weekly gain to 8.5%. South Korea’s Kospi jumped 3.1%, lifting its weekly advance to 15.3%.

The rally was powered by exporters, semiconductor shares and AI-linked companies.

Wall Street futures slipped 0.2% after the overnight advance, suggesting some investors were ready to lock in gains before the US Juneteenth break.

Hormuz optimism comes with caveats

The reopening of the Strait has removed the immediate fear of a prolonged supply squeeze, but analysts are not treating it as a permanent settlement.

The interim deal only guarantees toll-free passage for 60 days, while longer-term governance of the waterway remains unresolved.

The analysts noted that the future oversight of the Strait could increasingly be shared by Iran and Oman, creating scope for the introduction of a maritime service fee.

Such a move would challenge long-standing norms around free navigation and could add a new layer of uncertainty for global shipping and energy markets.

The warning matters because the Strait carried about a fifth of global oil and liquefied natural gas flows before the conflict.

A steady restart may keep crude under pressure, but any dispute over access fees could quickly restore a risk premium.

Dollar strength pressures metals and yen

The second major story was the dollar. The dollar index was on course for a 1% weekly gain at 100.78 after nine of 19 Fed officials signalled higher borrowing costs this year.

The yen weakened to 161.26 per dollar, beyond the 160 level watched for potential Japanese intervention.

US rate expectations also flattened the Treasury curve. Two-year yields rose this week, while 10-year and 30-year yields declined as lower oil prices improved confidence in the Fed’s inflation stance.

“The curve remained notably flatter than before the meeting,” Molly Nickolin, strategist at Morgan Stanley, told Reuters, citing higher expected policy rates and firmer confidence in the Fed’s credibility.

The stronger dollar weighed on metals. Spot gold fell 0.5% to $4,188 an ounce, while silver slipped 0.8% to $65.30.