Asia report: Kospi leads gains as oil prices slide

(Sharecast News) - Asia-Pacific markets closed higher on Friday as investors welcomed signs of progress toward a US-Iran peace agreement and looked ahead to SpaceX's historic stock market debut.

"The peace premium is powering a relief rally," said Patrick Munnelly, market strategy partner at TickMill.

"Lower oil is cooling inflation fears, Fed hike bets are being pushed further out, and AI dip-buyers are piling back in ahead of today's much-hyped SpaceX IPO."

Iranian state media reported that a draft memorandum of understanding between Tehran and Washington included a US commitment to lift oil sanctions and an Iranian pledge to reopen the Strait of Hormuz.

A peace agreement could be signed in Switzerland as soon as Sunday, Bloomberg reported, citing people familiar with the plans.

"Global equities are ending the week with a powerful relief rally as markets price a rising chance of a US-Iran diplomatic breakthrough," Munnelly said.

"President Trump said the US is nearing a deal with Tehran, raising hopes that a conflict which has driven volatility for more than three months could be moving toward resolution."

The regional rally followed gains on Thursday after chip stocks rebounded and US president Donald Trump signalled that an agreement with Iran was close.

Oil prices fell sharply, with Brent crude futures last down 3.82% on ICE at $86.93 per barrel, and the NYMEX quote for West Texas Intermediate dropping 3.99% to $84.21.

"Oil is the clearest expression of the shift in risk premia," Munnelly said.

"Brent has fallen another 2% to around $88.50 per barrel after Trump softened military threats and pointed to high-level talks with Iranian officials."

Munnelly said a formal signing ceremony could reportedly take place as soon as this weekend in Europe, with US vice-president JD Vance expected to attend.

"The market is moving from pricing escalation risk to pricing de-escalation relief," he said.

"That does not remove geopolitical uncertainty, but it materially reduces the immediate threat of a sustained energy shock."

Investors were also watching the Nasdaq debut of Elon Musk's SpaceX under the ticker SPCX.

The rocket company set a fixed offer price of $135 per share, giving it a valuation of $1.77trn.

SpaceX plans to sell 555.6m shares to raise $75bn, which would make it the largest initial public offering in history and more than triple Alibaba's $22bn US listing in 2014.

Munnelly said equities were responding not only to lower oil but also to the reduced probability of a more hawkish global central-bank response.

"AI remains the main beneficiary of the relief rally," he said.

"Korea's outsized rebound shows that investors still see semiconductors as the highest-beta expression of improving risk appetite.

"The recent selloff demonstrated that AI valuations are no longer immune to macro stress, but today's move confirms that dip-buying demand remains powerful when geopolitical and rates pressures ease," he added.

Equities in positive territory across Asia, Kospi leaps

Japan's Nikkei 225 jumped 2.81% to 66,020.04, while the broader Topix gained 1.35% to 3,881.96.

Mitsui Kinzoku surged 17.6%, Disco Corporation rose 14.09%, and Sumitomo Metal Mining gained 11.67%.

In China, the Shanghai Composite rose 1.12% to 4,031.51, while the Shenzhen Component added 0.75% to 14,963.41.

Fujian Forecam Optics jumped 19.99%, Guangdong Jia Yuan Technology gained 10.97%, and Suzhou TZTEK Technology rose 10.38%.

Hong Kong's Hang Seng Index climbed 1.93% to 24,718.10.

Chow Tai Fook Jewellery Group surged 15.2%, CMOC Group gained 12.17%, and Zijin Mining Group added 7.9%.

Alibaba offered to acquire Chinese grocery delivery company Pupu for $1.5bn, according to a report from Bloomberg, sparking a bidding war as it seeks to take market share from Meituan.

The proposal was more than double a $600m bid from former Alibaba affiliate Sun Art Retail, backed by DCP Capital.

The report came months after Meituan announced its $717m acquisition of Dingdong Fresh in February, as the two companies competed in China's food delivery and quick-commerce markets.

South Korea's Kospi 100 surged 4.74% to 10,076.49.

Hyundai Engineering & Construction jumped 28.36%, Hanmi Semiconductor rose 24.05%, and Doosan gained 16.96%.

South Korea's bourse operator activated a buy-side sidecar shortly after the market opened, temporarily suspending programme purchases of Kospi-listed stocks for five minutes following a sharp rise.

The mechanism is triggered when Kospi 200 futures climb at least 5% for one minute.

"The MSCI Asia Pacific index jumped 3.5%, its largest gain in two months, while South Korea's Kospi surged 8.4% as investors rushed back into AI and semiconductor names," Munnelly said.

Sydney in the green, Wellington rises despite disappointing manufacturing data

Heading down under, Australia's S&P/ASX 200 rose 1.98% to 8,804.00.

Genesis Minerals gained 10.83%, A2 Milk Company climbed 10.18%, and Liontown Resources advanced 9.82%.

Woodside Energy fell more than 2%, however, after exercising its pre-emptive right to acquire PetroChina's 10.67% stake in the Browse joint venture for $225m, alongside reimbursement of cash-call contributions made since 30 June 2025.

The acquisition would increase Woodside's stake to 41.27%.

The project was intended to develop Australia's largest undeveloped offshore gas resource, with estimated liquefied natural gas, liquefied petroleum gas and domestic gas capacity of 11.4m tonnes per year.

Across the Tasman Sea, New Zealand's S&P/NZX 50 gained 1.45% to 13,393.87.

A2 Milk Company rose 10.49%, Oceania Healthcare added 5.71%, and Heartland Group Holdings climbed 3.78%.

New Zealand's manufacturing sector slipped back into contraction in May, with the seasonally adjusted BNZ-BusinessNZ performance of manufacturing index falling to 49.9 from 50.4 in April and 52.8 in March.

The long-term average is 52.5, while readings below 50 indicate contraction.

"It is disappointing to see the PMI slip back into negative territory, even though the reading was only just under 50.0," said BusinessNZ director of advocacy Catherine Beard.

"Manufacturers are obviously struggling in the face of a combination of adverse influences, including lack of customer demand, high fuel prices and the conflict in the Middle East."

Finished stocks stood at 53.8 and deliveries at 51.9, while production, employment and new orders were broadly flat at around 50.

Micro firms with up to 10 employees recorded a reading of 46.0, while large companies with more than 100 workers posted 57.6.

Dollar mixed against regional G10 peers

In currencies, the dollar was last up 0.08% on the yen to trade at JPY 160.05, while it slipped 0.01% against both the Aussie to AUD 1.4185 and the Kiwi to change hands at NZD 1.7135.

"Rates markets have responded accordingly," Munnelly said.

"Treasury yields are steady, with the US 10-year around 4.46%, while short-term Fed pricing has moved in a less hawkish direction.

"Traders no longer fully price a 25bp Fed hike by December, with attention shifting instead toward a possible move in the first quarter of 2027."

Reporting by Josh White for Sharecast.com.