(Sharecast News) - Asia-Pacific markets mostly rose on Friday as investors navigated persistent uncertainty over the Strait of Hormuz, which remained largely closed despite a fragile two-week ceasefire between the US and Iran, keeping oil prices volatile.
The conflict in the Middle East, now in its second month, had continued to disrupt traffic through the critical energy waterway.
Tehran said it would reopen the strait if attacks ceased, while media reports indicated Israel had agreed to the truce following US president Donald Trump's decision earlier this week to pause strikes on Iran.
However, tensions remained elevated after Trump warned that Iran "better stop now" if it was charging tanker fees, while Iran's parliamentary speaker Mohammad Bagher Ghalibaf accused the US of breaching the ceasefire.
"Asian markets advanced, marking their first weekly gain since the onset of the Middle East conflict, as investors held a cautiously optimistic outlook ahead of US-Iran negotiations scheduled for this weekend," said Patrick Munnelly, market strategy partner at TickMill.
"Meanwhile, oil prices were on track for their most significant weekly decline in nine months.
"The MSCI Asia Pacific Index climbed by 0.8% after president Trump expressed optimism about reaching a deal with Iran, even as he warned Tehran of potential fees in the Strait of Hormuz.
"Technology stocks, perceived to be less affected by the conflict, led the charge, with South Korea - a key indicator for AI investments - seeing an impressive rise of 1.7%."
Markets manage gains across Asia
In Japan, the Nikkei 225 rose 1.84% to 56,924.11, supported by strong gains in Fast Retailing, up 11.99%, Fujikura, which climbed 11.97%, and Lasertec, up 7.44%.
The broader Topix slipped 0.04% to 3,739.85.
Chinese equities also advanced, with the Shanghai Composite gaining 0.51% to 3,986.22 and the Shenzhen Component rising 2.24% to 14,309.47.
Fujian Qingshan Paper Industry jumped 10.14%, Zhejiang Xinao Textiles rose 10.06% and Whirlpool China added 10.05%.
"Asian equity markets followed Wall Street's upward momentum, while oil prices held steady near their London close levels, reinforcing the sense that markets are choosing hope over headlines," Munnelly noted.
Economic data from China showed inflation edged higher in March, though the pace of growth slowed.
The consumer price index rose 1% year-on-year, down from 1.3% in January and below forecasts of 1.2%, while it fell 0.7% month-on-month compared with expectations for a 0.2% decline.
The moderation was attributed to seasonal effects following the Lunar New Year, with food prices dropping 2.7% and tourism prices falling 12.9% on the month.
Meanwhile, the producer price index increased 0.5%, its first positive reading since September 2022 and slightly ahead of expectations, reflecting rising cost pressures linked to the Middle East conflict.
"Adding a layer of nuance to the overnight session was the release of China's latest inflation figures for March," said Munnelly.
"Consumer price inflation eased slightly to 1.0% year over year - down 0.3 percentage points and a touch below market expectations.
"More notably, producer price inflation made a decisive turnaround, swinging from deflation at -0.9% in February to a positive 0.5% this time around.
"While it is still too early to draw firm conclusions, this divergence hints at an intriguing dynamic - in China, the ripple effects of elevated oil prices appear to be filtering through to factory gates yet are finding little traction at the consumer level - likely a reflection of persistently soft domestic demand."
Hong Kong's Hang Seng Index added 0.55% to 25,893.54, led by Contemporary Amperex Technology, up 9.02%, SMIC, which gained 4.58%, and WH Group, up 3.74%.
In South Korea, the Kospi 100 rose 1.5% to 6,754.15, with LG Innotek advancing 11.44%, Samsung Electro-Mechanics climbing 9.5% and LG Uplus up 7.54%.
The Bank of Korea kept its benchmark interest rate unchanged at 2.50%, in line with expectations from all 31 economists polled by Reuters, as policymakers weighed inflation risks tied to the Iran conflict against potential growth headwinds.
"In general financial markets have broadly kept their composure overnight, with price moves remaining relatively subdued despite mounting tensions around the US-Iran ceasefire," Patrick Munnelly said.
"Investors appear to be looking ahead with cautious optimism - placing their bets on productive diplomatic talks expected to unfold in Pakistan this weekend - rather than reacting to Donald Trump's pointed social media accusations that Tehran has violated commitments related to the Strait of Hormuz."
Stocks in the red in Sydney, Wellington
Down under, Australia's S&P/ASX 200 slipped 0.14% to 8,960.60, dragged lower by Orora, down 8.64%, Super Retail Group, which fell 4.05%, and Champion Iron, off 3.86%.
New Zealand's S&P/NZX 50 declined 0.7% to 13,181.44, with Air New Zealand down 3.26%, Eroad falling 3.09% and Fletcher Building losing 2.93%.
Data showed New Zealand's manufacturing sector continued to expand in March, with the BusinessNZ-BNZ performance of manufacturing index easing to 53.2 from 54.8 in February, although sentiment weakened as more businesses reported negative conditions, according to BusinessNZ's director of advocacy Catherine Beard.
Dollar strengthens as oil prices climb
In currency markets, the dollar strengthened modestly, rising 0.18% on the yen to last trade at JPY 159.24, as it gained 0.27% against the Aussie to AUD 1.4158, and advanced 0.32% on the Kiwi to change hands at NZD 1.7123.
Oil prices remained elevated, with Brent crude futures last up 1.02% on ICE at $96.90 per barrel, and the NYMEX quote for West Texas Intermediate rising 1.25% to $99.09.
Reporting by Josh White for Sharecast.com.
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